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26 Emory Bankr. Dev. J. 125 (2009-2010)
Escaping the Death Spiral of Dues and Debt: Bankruptcy and Condominium Association Debtors

handle is hein.journals/bnkd26 and id is 127 raw text is: ESCAPING THE DEATH SPIRAL OF DUES AND DEBT: BANKRUPTCY AND CONDOMINIUM ASSOCIATION DEBTORS INTRODUCTION In the current financial crisis, condominium associations face rising numbers of delinquent member dues, increased assessments, soaring foreclosure rates, and crushing association debt. This parade of horribles creates a circular death spiral of dues and debt, where high delinquency in dues payment leads to increased assessments, which produces even more delinquencies. Filing for bankruptcy, particularly under chapter 11, could present collapsing condominium associations with a means to weather the economic storm. Condominiums and condominium associations are integral pieces of the American residential landscape. Each new condominium is accompanied by a condominium association, and every condominium association holds significant power over its individual unit owners.1 The condominium association provides the members with a forum for condominium governance. Through this forum, unit owners can reap the benefits of collective action, such as maintenance of common areas and improvement of the condominium facilities. In order to preserve these benefits, the condominium association can exercise various powers to ensure member compliance. These powers include collecting dues, levying assessments for special purposes, and foreclosing on unit owners who do not comply. Despite the condominium association's collective action benefits and corresponding enforcement powers, the current mortgage, financial, and credit crises place condominium associations in a precarious position. Falling housing prices, slowdowns in nearly every sector of the economy, and sweeping job losses all increase the likelihood that condominium association 1 This Comment will use the terms condominium, condominium association, and individual units frequently. The first refers to the entity generally thought of as a condominium complex, complete with its governing documents, physical structure, common areas, and individual units. The second term is the general governing body of the condominium, usually comprised of the individual unit owners. In this article, the condominium association will be referred to sometimes merely as the association for brevity. The last term refers to an individual unit in a condominium, or colloquially, one condominium in a condominium complex.

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