Need Advice: (800+ credit score) I may need to give my property back to the bank

Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes

1y

Ouch. That is a rough start. Condos suck.

I would hire an attorney, but not a bankruptcy attorney. I would hire an attorney that understand insurance. Sounds like your HOA either mismanaged their insurance, or they had insufficient insurance.

Regarding your insurance, find a local Public Adjuster and talk to them. If you haven't heard that term, think "Defense Attorney" for dealing with your insurance carrier.

3 Reply

Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
1y
Quote from @Greg Scott:

Ouch. That is a rough start. Condos suck.
I would hire an attorney, but not a bankruptcy attorney. I would hire an attorney that understand insurance. Sounds like your HOA either mismanaged their insurance, or they had insufficient insurance.
Regarding your insurance, find a local Public Adjuster and talk to them. If you haven't heard that term, think "Defense Attorney" for dealing with your insurance carrier.

A true condo I think you just own the airspace and the HOA owns the walls and everything else. A townhouse you own the interior not the exterior.. I could ahve this wrong but I am thinking in that kind of building the HOA is responsible to pay to repair your unit.. again I could be wrong.
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2 Reply

Jorge Borges

OP

Rental Property Investor · Billerica, MA · Member since 2022 · 29 posts · 27 votes

1y

@Greg Scott Thanks for the suggestion.

The association did hire a Public Adjuster. The PA along with an attorney for the association, took the master policy insurance company to court and a settlement amount was determined. But that amount doesn't appear to be enough.

In terms of your suggestion to hire an attorney... Would this be for me personally? What kind of attorney? I am assuming one that deals with real estate, right?

0 Reply

Jorge Borges

OP

Rental Property Investor · Billerica, MA · Member since 2022 · 29 posts · 27 votes

1y

John Clark --> I don't think we are allowed to go after the insurance from the owner who caused the pipe to burst. I believe it may be against condo bylaws. But it could be something to look into. What kind of attorney would I need to seek out?

0 Reply

Jorge Borges

OP

Rental Property Investor · Billerica, MA · Member since 2022 · 29 posts · 27 votes

1y

@Greg Scott - You are on the right track. From what I understand, the condo association is responsible for all construction elements of individual units (such as drywall, flooring, cabinets, and fixtures as originally installed).

But in my case, the association doesn't have enough money for that.

0 Reply

JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
1y
Quote from @Jorge Borges:

@Greg Scott - You are on the right track. From what I understand, the condo association is responsible for all construction elements of individual units (such as drywall, flooring, cabinets, and fixtures as originally installed).

But in my case, the association doesn't have enough money for that.

If this is truly the case, I would file a suit against the HOA as they either failed to maintain proper reserves or proper insurance or both. As to jumping before assessments get going that probably won't work,.as it's likely to get discovered or disclosed during the due diligence period.
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Fernando AlonsoPro Member

Investor · Miami, FL · Member since 2025 · 33 posts · 29 votes

1y

Hey Jorge.

Before even thinking about bankruptcy (which I’d personally stay far away from, it wrecks your credit long-term and stays in court records permanently), there are a few more paths you can explore.

One is reaching out to the bank to discuss a short sale. In your case, the numbers might work. The unit is gutted and tough to market as-is, so a foreclosure would likely be a nightmare for them. It could actually save them time and money. They’re more likely to work with you than people think, especially in distressed situations like yours.

Another idea is to sell the unit yourself at a deep discount (even close to your loan balance) and just walk away clean. But here's the catch (and the opportunity): in the sale, include a clause that you retain your rights to pursue claims against the HOA and insurance companies. That way you're keeping the possibility of future recovery, which could be your way back into the market. You'd be trading your equity for peace of mind, a clean credit record, and a chance to rebuild sooner than later.

Forget about trying to rebuild the unit yourself or paying for more assessments. You’ve already carried the weight too long. The focus now should be on preserving your financial health and keeping your credit intact.

If this all can be done through negotiation, no courts, no litigation, no foreclosures or Bankruptcies, all the better. Once you’re out, with your name and credit clean, you’ll be in a solid position to start over.

Wish you the best Jorge!

3 Reply

Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

1y

Quote from @Jorge Borges:

I don't want to ruin my credit, but I may be out of options. I hope that members of the BP community can guide me through the bank foreclosure process or help come up with other ideas to save this property.

Background Summary:

I purchased a condo in Lynn (on the water) in October 2022. My first renters moved in after closing, and I rented the unit to them for 4 months. At the end of their mid-term lease, they vacated my unit.

On February 4, 2023, a call was received regarding the fire alarm, and the Lynn Fire Department responded to the building. The issue, as determined by the Lynn FD, was a broken sprinkler line due to a window left open in a unit on the 6th floor. This resulted in a large amount of water leaking into the units below on the 5th floor and making its way down to the basement. As a result, my unit was found to be completely water-damaged, and then a few weeks later was gutted (to the studs) by one of the clean-up contractors the association hired. A claim was made against the building's master insurance since the damages were so extensive - this water leak impacted 21 out of the 88 units in the building.

Fast forward a few years... On July 3rd, 2025, the courts finally compelled the insurance company to settle. However, the settlement amount will only cover a small percentage of the cost to rebuild my unit. I did have an HO6 insurance policy for my unit, but I don't believe the coverage I had will be sufficient to rebuild it.

Given that I have been paying the mortgage, condo fees and insurance or the past 2+ years (since the water damage) without my unit being habitable, and now understanding that the insurance funds will NOT be enough to rebuild my unit, I am contemplating other options such as giving the property back to the bank or filing for bankruptcy. I don't fully understand my options, so I wanted to speak with an attorney or members of the BP community to clarify them and help me make a decision about the condo unit.

In the next 60-90 days, the association will undoubtedly raise condo dues (several hundred dollars) to address other significant updates that the building needs as a whole (such as a new elevator and new electricity throughout the building).

I'm very responsible with my finances and have always maintained an excellent credit score. Therefore, this decision to potentially damage my credit (by returning the property to the bank or declaring bankruptcy) is extremely difficult, but I fear it may be my only option.

Financials:

- Unit is about 470 square feet and is gutted to the studs

- About $150K due on the loan (monthly payment $957)

- Mid-term rent is $2,200 to $2,400 per month

- Rehab cost is between $70K-$100K

- Monthly Condo Fees: $506 (likely to go up $100-$300 in the next few years)

- ARV is about $260K-$280K

How did you determine the rehab cost? It seems very high for 470’ of interior only. It is about 2 times what I would expect (I expect $35k to $50k).

You do not indicate what you are expecting to get from the HOA settlement with the insurance.

$150k (owed) + $100k (rehab cost that seems very high for 470' interior only) minus the HOA settlement is less than $260k. This tells me that is you paid for a fee based mls listing you could likely sell for more than $150k.

I recently placed an offer on a down to the studs condo rehab of $352,500 (our only contingency was HOA, we waived inspection and financing contingencies) that had an ARV of ~$570k. I was told that 4 higher offers were received. With preferential financing terms, after the rehab, holding, and selling costs we were projecting a profit of $30k to $35k. The offers greater than mine I question their cost of money (mine was preferential at 5% for $250k - only those not needing a loan were beating this) and their underwriting. It seems very thin margin.

My point is between your equity position and the insurance settlement, I do not see the need to suffer a fore closure.

Good luck

6 Reply

Marcus Auerbach

Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes

1y

Same conclusion as Dan. Rehab should be under 50k, plus loan 150k is 200k and ARV is 260k you have 60k equity. If you get 20k from the insurance, that's even better.

- You could just drywall (no kitchen, flooring, millwork etc) and sell for 200k.
- Or finish the job for another 30k more and sell for 260k.
- Or hold it for another couple of years until the dust has settled before you sell it.

Sucks, but no need to wreck your credit and walk away from equity. Unbelievable, that insurance does not cover the one thing you'd be worried about in a condo building! Sorry, you have to deal with this!

2 Reply

James Hamling

Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes

1y

@Jorge Borges I am confused.

By the numbers you give here, just going by them, if you did reno to the high side of $100k, would you not get the ARV high side of $280k?

After reno that's $180k.

You say you owe $150k.

Now I'm not saying that's profitable by any means but it saves not having to do bankruptcy or foreclosure does it not?

Or just sell it as-is for the $150k.

Or get with a good GC and JV with them that you'll split everything 50/50 above say $180k + there reno cost's up to $50/60k. If reno budget's are 70-100k that # obviously has GC profit and overhead and in a JV, doing a split, that O&P is removed as GC O&P is a % of that net at sale.

I am confused how giving it back to the bank, foreclosure or bankruptcy is a necessary direction of consideration here given these numbers.

2 Reply

Jorge Borges

OP

Rental Property Investor · Billerica, MA · Member since 2022 · 29 posts · 27 votes

1y

Thanks for the response @James Hamling. I may send you a private message to further discuss your suggestion and validate some of my figures.

0 Reply

Ken M.

Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes

1y

Quote from @Jorge Borges:

I don't want to ruin my credit, but I may be out of options. I hope that members of the BP community can guide me through the bank foreclosure process or help come up with other ideas to save this property.

Background Summary:

I purchased a condo in Lynn (on the water) in October 2022. My first renters moved in after closing, and I rented the unit to them for 4 months. At the end of their mid-term lease, they vacated my unit.

On February 4, 2023, a call was received regarding the fire alarm, and the Lynn Fire Department responded to the building. The issue, as determined by the Lynn FD, was a broken sprinkler line due to a window left open in a unit on the 6th floor. This resulted in a large amount of water leaking into the units below on the 5th floor and making its way down to the basement. As a result, my unit was found to be completely water-damaged, and then a few weeks later was gutted (to the studs) by one of the clean-up contractors the association hired. A claim was made against the building's master insurance since the damages were so extensive - this water leak impacted 21 out of the 88 units in the building.

Fast forward a few years... On July 3rd, 2025, the courts finally compelled the insurance company to settle. However, the settlement amount will only cover a small percentage of the cost to rebuild my unit. I did have an HO6 insurance policy for my unit, but I don't believe the coverage I had will be sufficient to rebuild it.

Given that I have been paying the mortgage, condo fees and insurance or the past 2+ years (since the water damage) without my unit being habitable, and now understanding that the insurance funds will NOT be enough to rebuild my unit, I am contemplating other options such as giving the property back to the bank or filing for bankruptcy. I don't fully understand my options, so I wanted to speak with an attorney or members of the BP community to clarify them and help me make a decision about the condo unit.

In the next 60-90 days, the association will undoubtedly raise condo dues (several hundred dollars) to address other significant updates that the building needs as a whole (such as a new elevator and new electricity throughout the building).

I'm very responsible with my finances and have always maintained an excellent credit score. Therefore, this decision to potentially damage my credit (by returning the property to the bank or declaring bankruptcy) is extremely difficult, but I fear it may be my only option.

Financials:

- Unit is about 470 square feet and is gutted to the studs

- About $150K due on the loan (monthly payment $957)

- Mid-term rent is $2,200 to $2,400 per month

- Rehab cost is between $70K-$100K

- Monthly Condo Fees: $506 (likely to go up $100-$300 in the next few years)

- ARV is about $260K-$280K

Your comment: "I may need to give my property back to the bank" "the association doesn't have enough money for that"

Okay, so how does a Condo Association raise enough money to solve a problem? They raise fees, a lot! Jump before everyone else does.

First, it's unlikely your bank ever owned the property unless you bought an REO. Banks lend money. They "secured" their loan against the property. It always was your property, it is your property, it will be your property until/unless you deed it over to them or they foreclose.

Second, with that much damage to the building, it's unlikely banks and insurance companies are going to be favorable going forward.

No need for a bankruptcy unless you have other unmanageable debt. That is using a

magnetron to kill a mosquito. (By the way, what the heck is a magnetron?)

Third, sell the unit to a flipper. They specialize in tough properties. Yes, you will lose some money. but it will be out of your hair.

Sorry, for the monetary loss, always am, but this is real estate, it's risky.

1 Reply

Jorge Borges

OP

Rental Property Investor · Billerica, MA · Member since 2022 · 29 posts · 27 votes

1y

@Ken M. , thanks for the message. I think selling to a flipper is a good idea, but what would they be willing to pay? I am assuming they won't want to pay what I owe on it; and then what do I do for the difference (i.e., short sale)? I would still need to negotiate with the bank, I assume. Again, I am new to this and don't really know how to start the conversation with the bank, especially since I am not behind on any payments.

0 Reply

Greg M.

Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes

1y

My head is spinning reading this. I honestly can't figure it or your (in)actions out.

You let the unit sit vacant for 30 months? With a rehab of 70K-100K (which sounds way too high for such a small unit), you could have had the place rented out for $2200-$2400 a month. Based on the mortgage and HOA dues payments you listed, you'd be netting $700-$900 a month. What did you leave out here?

You had an HO6 policy, but say "I don't believe the coverage I had will be sufficient to rebuild it." WTF does that mean? You know your policy limits. Is it or isn't it enough to cover the repairs. If not, how much will it cover? Why have you not had them pay out to the policy limits and let them go after the other insurance company?

Was the HOA legally responsible for the repairs? If so, force the HOA to do an assessment to all the units to cover the cost of repairs.

2 Reply

Jorge Borges
OP
Rental Property Investor · Billerica, MA · Member since 2022 · 29 posts · 27 votes
1y
Quote from @Greg M.:

My head is spinning reading this. I honestly can't figure it or your (in)actions out.

You let the unit sit vacant for 30 months? With a rehab of 70K-100K (which sounds way too high for such a small unit), you could have had the place rented out for $2200-$2400 a month. Based on the mortgage and HOA dues payments you listed, you'd be netting $700-$900 a month. What did you leave out here?

You had an HO6 policy, but say "I don't believe the coverage I had will be sufficient to rebuild it." WTF does that mean? You know your policy limits. Is it or isn't it enough to cover the repairs. If not, how much will it cover? Why have you not had them pay out to the policy limits and let them go after the other insurance company?

Was the HOA legally responsible for the repairs? If so, force the HOA to do an assessment to all the units to cover the cost of repairs.

Lots of great questions... First off, I am new at being a real estate investor, new to condo policies, and new to insurance claims. From my understanding, the HO6 policy does not cover full-scale damages, such as the damage my unit incurred. Therefore, my HO6 insurance company had to wait for the association master policy to pay out before evaluating what additional compensation they could provide. Unfortunately, the settlement with the master condo policy took over 2 years since 20 units in the building were impacted (maybe that is the missing information). My dwelling coverage is about $30K, so I'm guessing that is what I'll get.

Why I didn't pay to rehab the unit out of my own pocket (my inaction) to start renting it out again is a good question which has a lot of variables. We (one of the several impacted unit owners) didn't know it would take over 2 years to get a settlement; there were several other major issues with the building as a whole that had been giving me doubts regarding the building's ability to keep running. One of the many issues during those 2 years was that the building received "condemned" status for a few months (that has since been resolved), we no longer have a master insurance policy (because of too many claims and poor building quality) and likely a few more issues.

Netting $700-900 a month is also not quite accurate. I didn't include insurance, cost to find tenants, cleaning between tenants, and other utilities that I pay (which are included for tenants at the $2200-2400 per month rent). The net is more like $200 a month. Since the unit is only used for mid-term rentals, the turnover is every 3 months, so the cost to find tenants is somewhat high over the year.

Yes, from my understanding, the HOA is legally responsible for a majority of the repairs, but the insurance settlement was much lower than what we were asking for.

I think I need to look around for a better rehab quote, as I do agree that the $70K-$100K range sounds high. I need all new plumbing, new electrical work, more framing, new floors, walls, kitchen, and bathroom.

In short, I feel like I am getting abused by insurance. I need more advice in this area.
0 Reply
Greg M.
Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
1y

This is not your problem. If the HOA is liable and the insurance isn't enough to cover the costs, the HOA (AKA 88 individual owners) need to step in and cover the cost. This is no different than an unexpected roof expense where the HOA doesn't have reserves. They do an assessment to cover it.
I'd approach them about this and if they balk, consult a lawyer about it.
4 Reply

Allan C.

Rental Property Investor · Member since 2018 · 826 posts · 809 votes

1y

You've got good advice from others already so I won't add more. You're in a tough spot so I'll just say sorry you ran into this, and wish you luck recovering from it.

0 Reply

Jeremy Horton

Rental Property Investor · Somewhere over the Rainbow · Member since 2021 · 1k+ posts · 1k+ votes

1y

Call me crazy but I'm assuming there are a lot of other owners in your same predicament...maybe they want out of the headache too. Maybe you can buy their units for cheap.

That's what I'd honestly do - use this as a problem to scale up and own the bulk of the facility (or dare I say, the entire facility). Renovate it, insure it, rent it etc

0 Reply

Stuart UdisPro Member

Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes

1y

The HOA master policy likely does not cover the interior finishes of your unit, possibly not even mechanicals unless they are shared. You would have to review the master policy. This is probably why the settlement amount is not sufficient. You should have a separate property policy which covers the interior our unit. These policies also have endorsements for rental loss. It sounds like you notified your carrier for your property policy. Not clear if there was a rental loss endorsement but why are they not covering the loss for interior damage? Did you obtain a replacement cost or actual cash value policy? This may be why.

[email protected]

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Stuart UdisPro Member

Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes

1y

@Greg M. This likely isn't the case. Someone would have to review the HOA declaration but I would anticipate the interior of the unit finishes are not a common element. This is where the unit owners policy should come into play. A roof more commonly would be a common element and covered by the HOA unless there's private access such as a roof deck in which case that's often reserved as a limited common element. Rarely will this be the case for the interior of a unit but the HOA Declaration will control. What if one unit owner spends $500k on a renovation of their unit decking it out with high end finishes whereas no other unit owner improves their unit for more than $100k. Why would the HOA be responsible for covering the unit owners interior unit renovation? This is why interiors are rarely common elements.

Proper procedure in this case would have been to file a claim under the unit owners policy assuming it’s not a common element. Depending on whether the unit was insured with replacement or actual cash value would dictate whether the insurance would cover the depreciated value of finishes or replacement of like kind but new. The carrier would then likely seek reimbursement from the responsible party through subrogation.

[email protected]

2 Reply

Greg M.
Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
1y
Quote from @Stuart Udis:

@Greg M. This likely isn't the case. Someone would have to review the HOA declaration but I would anticipate the interior of the unit finishes are not a common element. This is where the unit owners policy should come into play. A roof more commonly would be a common element and covered by the HOA unless there's private access such as a roof deck in which case that's often reserved as a limited common element. Rarely will this be the case for the interior of a unit but HOA Declaration control. What if one unit owner spends $500k on a renovation of their unit decking it out with high end finishes whereas no other unit owner improves their unit for more than $100k. Why would the HOA be responsible for covering the unit owners interior unit renovation? This is why interiors are rarely common elements.
Proper procedure in this case would have been to file a claim under the unit owners policy assuming it’s not a common element. Depending on whether the unit was insured with replacement or actual cash value would dictate whether the insurance would cover the depreciated value of finishes or replacement of like kind but new. The carrier would then likely seek reimbursement from the responsible party through subrogation.

We're missing lots of info and just speculating. However, since the HOA insurance paid out and is covering part of the interior damage, it is likely to say that either the HOA insurance covered (partial) interiors or most likely the HOA had some liability in the water leak (i.e. not properly insulating the pipe). If not, and the HOA just had excess funds after common area repairs, the HOA would not have been able to disburse those funds to the affected owners as those funds would belong to all owners, not just affected ones.
I own a unit where in case of destruction, the HOA is required to replace the cabinets and a few other items. Extremely rare in new HOAs, but not unheard of in older HOAs.
0 Reply
Patrick Roberts
Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
1y
Quote from @Stuart Udis:

@Greg M. This likely isn't the case. Someone would have to review the HOA declaration but I would anticipate the interior of the unit finishes are not a common element. This is where the unit owners policy should come into play. A roof more commonly would be a common element and covered by the HOA unless there's private access such as a roof deck in which case that's often reserved as a limited common element. Rarely will this be the case for the interior of a unit but HOA Declaration control. What if one unit owner spends $500k on a renovation of their unit decking it out with high end finishes whereas no other unit owner improves their unit for more than $100k. Why would the HOA be responsible for covering the unit owners interior unit renovation? This is why interiors are rarely common elements.
Proper procedure in this case would have been to file a claim under the unit owners policy assuming it’s not a common element. Depending on whether the unit was insured with replacement or actual cash value would dictate whether the insurance would cover the depreciated value of finishes or replacement of like kind but new. The carrier would then likely seek reimbursement from the responsible party through subrogation.

I was trying to make sense of this whole mess while reading through it, but this is what I was thinking as well. The damages are the result of someone else's action or inaction, and therefore the liability should rest with them. This is not a natural disaster like a flood. OP (assuming they have insurance coverage) should be filing a claim with their own insurance, and then letting the insurer go ham on whomever is responsible for this whole mess. If there is no insurance, then I would imagine that a consultation with an attorney to determine the viability of a suit against those responsible would be the best next step.

Either way, I would not be filing BK or going into foreclosure over this. I would be in the unit each night hanging drywall and laying flooring while documenting everything. Then, it's lawyer time.
3 Reply
Ken M.
Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
1y
Quote from @Patrick Roberts:

Quote from @Stuart Udis:

@Greg M. This likely isn't the case. Someone would have to review the HOA declaration but I would anticipate the interior of the unit finishes are not a common element. This is where the unit owners policy should come into play. A roof more commonly would be a common element and covered by the HOA unless there's private access such as a roof deck in which case that's often reserved as a limited common element. Rarely will this be the case for the interior of a unit but HOA Declaration control. What if one unit owner spends $500k on a renovation of their unit decking it out with high end finishes whereas no other unit owner improves their unit for more than $100k. Why would the HOA be responsible for covering the unit owners interior unit renovation? This is why interiors are rarely common elements.
Proper procedure in this case would have been to file a claim under the unit owners policy assuming it’s not a common element. Depending on whether the unit was insured with replacement or actual cash value would dictate whether the insurance would cover the depreciated value of finishes or replacement of like kind but new. The carrier would then likely seek reimbursement from the responsible party through subrogation.

I was trying to make sense of this whole mess while reading through it, but this is what I was thinking as well. The damages are the result of someone else's action or inaction, and therefore the liability should rest with them. This is not a natural disaster like a flood. OP (assuming they have insurance coverage) should be filing a claim with their own insurance, and then letting the insurer go ham on whomever is responsible for this whole mess. If there is no insurance, then I would imagine that a consultation with an attorney to determine the viability of a suit against those responsible would be the best next step.

Either way, I would not be filing BK or going into foreclosure over this. I would be in the unit each night hanging drywall and laying flooring while documenting everything. Then, it's lawyer time.

Unfortunately, your solution is to sue the person who owns the Unit on the 6th floor of the window left open. How likely you are to enjoy the experience, depends on your other options and personality. Have an attorney review the Lynn Fire Department report to find out if negligence was an issue. You might eventually win the case. Would you collect?, no way to know.

1 Reply

Henry Lazerow

Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes

1y

Hire a public adjuster. If you had homeowners insurance this should all be covered. You did have your own homeowners policy correct? Your lender likely required a sufficient homeowners policy so you should be all covered. Normally your associations insurance is not for interior of your unit issues.

1 Reply

Jorge Borges
OP
Rental Property Investor · Billerica, MA · Member since 2022 · 29 posts · 27 votes
1y
Quote from @Henry Lazerow:

Hire a public adjuster. If you had homeowners insurance this should all be covered. You did have your own homeowners policy correct? Your lender likely required a sufficient homeowners policy so you should be all covered. Normally your associations insurance is not for interior of your unit issues.

@Henry Lazerow - Our condominium association hired a public adjuster and a litigation attorney since we had to take the insurance company to court. The settlement figure for damages to common areas and individual units was based on help from the public adjuster and attorney - but it still may not cover all the repairs.

Are you suggesting I hire a public adjuster for my own personal unit?
0 Reply

Henry Lazerow

Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes

1y

Yes hire an adjuster for your own personal insurance policy. Your personal policy should fully cover this and they should be the ones suing the responsible parties not you.

0 Reply

Will Cook

Lender · Denver, CO · Member since 2017 · 16 posts · 3 votes

1y

I agree with Henry's plan of action.

After reading this story, there's just too much risk buying a condo.
unit is just 470 square feet which makes the pool of lenders few.
HOA is insolvent.
Are more than 50% of the units rentals or owner occupied?

That being said a bankruptcy is bad from a credit perspective but there are some lenders who will finance you 1 day after BK (chapter 13 usually), approx. 10-13% rates today with credit below 660.
One client I worked with, had strategized his BK so well (on his own) that after 1 year he still had 700+ credit scores and was only dinged on the BK. I was beside myself but then I thought about how our society has become more absurd since 2012.
...Anyway, I think with a chapter 13 you may be able to reduce the principal balance to the property's current market value minus all the rehab expenses. I'd discuss this with a qualified attorney or try the insurance adjuster route.
DISCLAIMER: I am not an attorney. I am not recommending this path, nor advising you or anyone else to do so. I am simply describing past scenarios which is no guarantee of the future.

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Need Advice: (800+ credit score) I may need to give my property back to the bank

Need Advice: (800+ credit score) I may need to give my property back to the bank

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