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i bought a condo (modern loft style) that was new construction in austin texas (near downtown, but not right downtown). shorty after the 80 units sold people began to notice major construction errors. sagging walls, leaking roofs, cracking floors etc. about 7 years ago we had an assessment to hire a lawyer to sue the builders. well it's been 7 years now and every few months we get an update from the legal team that the trial is postponed again. it seems there were 2 different contractors involved, and one of them is bankrupt and their insurance company (based in delaware) is insolvent. they keep finding subcontractors that are at fault also and bringing them into the lawsuit. although the city of austin issued an approval on the construction when it was in completion phase, they have since come back and declared the building so deficient that it's "yellow tagged". meaning we can continue to live in the units at our own risk, but we can't sell.
some of the owners have protested their property taxes and have received re-valuations of $1.00 so they owe no taxes. i am in the process of doing the same. my place is livable and my mortgage is reasonable, but at some point there is going to have to be a conclusion to this saga. some of the owners units are in bad shape and have had to be "propped up" and have constant leakage when it rains (which here is rarely.) the legal team has told us that it will cost twice as much to repair the buildings than it would to level the complex and rebuild it. some of the owners are optimistic that they will get a new condo built eventually. i'm kinda thinking thats "pie in the sky".
i guess i'm questioning if anyone on this site has seen a similar situation and if anyone thinks there could possibly be any kind of optimistic results?
my place is livable and my mortgage is reasonable, but at some point there is going to have to be a conclusion to this saga.
Sounds to me like you may eventually win in court, but there will be no company or no insurance company to pay out. If the sub contractor insurance pays out, it will only be the portion they are responsible for. In a circumstance such as this, a loan can be given to the association and a special assessment or dues increase will be needed to be issued from your condo association to you to pay for the loan. Its the duty of the association to fix the building at any cost and pass that cost along to you.
Quote:
Originally Posted by borgerboy
the legal team has told us that it will cost twice as much to repair the buildings than it would to level the complex and rebuild it.
I doubt it. When your legal team was getting quotes to repair the roof, they likely got estimates for a total demolition of old roof and new roof installed rather than simply fixing the spots that are leaking. In other words they are shooting for the most expensive fix. They are not shopping for deals or even an adequate fix.
Quote:
Originally Posted by borgerboy
some of the owners are optimistic that they will get a new condo built eventually. i'm kinda thinking thats "pie in the sky".
Since there is no one around anymore to pay, its not going to happen.
Personally, if it was me, I would be saving and preparing for bankruptcy. When the time comes that the dues skyrocket or a $100k special assessment is due, I would simply walk away from the condo and declare bankruptcy. The benefits of a bankruptcy decision depends on state law of course.
Worst case scenario, everyone defaults on their mortgages, and walk away. A developer will purchase the entire building for little cost and then fix things themselves for a fraction of you were quoted, then re-sell or rent all the units.
Until then, think of it as rent and see what happens.
thanks for the good info. but @ kenneth in previous post i don't understand what you're saying. would appreciate it if you could elaborate or re-word your advice.
the previous post concerning bankruptcy really scares me. i'm within a couple of years of retirement and although i'm not well off, i have been funding my 401k and i have a company pension. those 2 accounts plus social security should allow me to continue to live in this condo for the rest of my life. (at my current payment and including increases in property taxes). i don't think bankruptcy is an option at my age and place in life. however if there is a huge assessment i couldn't afford to stay.
the way i understand things about walkaway's and bankruptcy is that it's easier to walk away or do "deed in lieu" then it is to get out of a special assessment. the condo is in texas. i have no plans to let the condo go back, but if a huge special assessment is looking likely then i might have to consider letting the condo go. i don't think the bank will come after my retirement accounts, but i imagine the association would. any ideas on this?
two more quick items concerning the property is that the neighborhood has finally started to "take off" with major retail and construction planned within in walking distance. the other thing i didn't mention is that phase 2 of my condo complex (42 of a total of 84) were sold at auction. so half of us have 5 or 7 year old mortgages financing our condos at a quite high value. (that was during the gogo years of 2006-7). when the real estate market crashed in this area, the builder sold the last 42 condos at half or less what we paid. i'm also pretty sure they were appraised of the fact that the units had major construction deficits.
if anyone is interested in how this is playing out i went ahead (possibly against my better judgement) and made a detailed post about this issue on the austin, tx city data forum. s**t may hit the fan, but maybe not.
Borgerboy, the main problem is that you are dumping money into a home that is effectively unsellable. The disclosure of all the issues, as well as the ongoing lawsuit, means that no one will buy it except for pennies on the dollar, and no lender will make a loan.
I would go talk to a good real estate lawyer. You are going to have to figure out how you are going to bail out of this thing, the sooner the better as you are dumping good money after bad. Especially as you are figuring on retiring in a couple of years.
We can suggest all sorts of things, but you really, really need a good lawyer.
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