A byproduct of the recent real estate boom and bust is an outbreak of phantom condominium units, once a rare phenomenon. Investors or lenders considering an investment in a distressed condominium project with phantom units need to be attuned to potential problems.
Phantom units are possible because Florida law does not require that a condo unit be constructed before it is legally created. In fact, a “phantom unit” is a condominium unit that has been declared — created by the recording of the declaration of condominium — but not constructed. These unconstructed but declared units have little to no economic value but can present myriad headaches to investors – including the need to pay assessments on each phantom unit.
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