We are representing condominium homeowners when the developer fails before he/she has completed the project.
We are developing a new area of our Wisconsin condominium law practice which, frankly, we never anticipated would be necessary. But now it is obviously needed.
That area is representing condominium homeowners in projects where the developer has failed before he/she has completed the project. Perhaps half the units are sold. The developer is out of money and gives up, or ought to. The bank is at the door. How do you protect the persons who have already bought in to the project? Keep in mind that the condominium homeowners are the only actors in the drama who did not join to make a profit: the developer, the lender, the builder, the unpaid vendors, all took commercial risks in the hope of good financial returns.
The homeowners, meanwhile, only wanted a home. Ironically, they are usually the only group not automatically represented at the workout table. We fill that gap.
A Wisconsin condominium developer in distress threatens the Neutron Bomb effect: Everyone dies, but the building continues to stand. The developer defaults on promises and disappears. The bank acquires real estate it does not want nor knows how to maintain. Vendors go unpaid, the condominium budget is underfunded. The building is a partial shell.
Our job is to counsel our clients and show our fellow involuntary actors, the banks, the vendors, etc., how to avoid the Neutron Bomb effect.
Just because the developer has failed doesn’t mean the project cannot go forward in an orderly fashion, with transparent governance at the association level and with losses mitigated, if not wholly avoided, and neighborhoods preserved. It takes skill and patience.