Beware: "Broken" Subdivision Pitfalls Will Linger for Years to Come: Top Ten Questions You Need to Ask


We now see signs of hope on the horizon for the battered real estate market. But recovery typically happens in stages and there is no reason that this recovery will differ in that regard. At the initial stages of a recovery, sales of unsold inventory will increase. At the same time, projects which were “mothballed” as rentals pending the recovery will re-enter the market as for-sale residences. Many subdivision projects which were stalled when the recession began will be among the first to test the market. New projects will be further behind in the process depending on where they were in the entitlement or construction process when sales ground to a halt. Common interest subdivision projects which were left with a mix of homeowners and an active owners association, as well as unsold units that were vacant or leased, are often referred to as “broken” projects. These projects were often the most problematic at the heart of the recession and will continue to pose more challenges as they change hands and enter the retail market, often with sellers several steps removed from the original developer. What questions should be asked before an acquisition of the unsold homes through foreclosure or a bulk sale?

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Kathleen Carpenter, Esq., Luce Forward Hamilton & Scripps | Attorney Advertising

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