Developers should be aware of the risk of creating Phantom Units. With the downturn of the real estate market and economy. Now is a good time for developers to be mindful of creating Phantom Units.
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. Thereby, creating units that have little to no economic value but can cause significant liability to the developer/investor. The biggest liability being the need to pay assessments on each phantom unit.
If you are developer and or investor considering purchasing a distressed condo property. It is essential that the project is analyzed to ensure and limit the risk in creating Phantom Units.