Many substandard condo developments have been built by small corporations that d
ID: 434819 • Letter: M
Question
Many substandard condo developments have been built by small corporations that declare bankruptcy or go out of business when legal actions are started against them by condo buyers. What legal remedies might reduce this moral hazard problem? Legal remedies that might reduce moral hazard among small corporations that build condos include O A. providing limited liability for these builders who incorporate. O B. required these builders to post a surety bond. ° C. excluding these builders from insurance mandates. O D. prohibiting these builders from receiving deferred payments O E. establishing wage maximums that these builders can be paid If you were considering buying a condo in a new building, what characteristics of the builder would make you more likely to buy? Explain. To reduce problems associated with moral hazard, you should be more willing to buy a condo from a builder who O A. O B. is young and recently trained in the latest techniques. is not already wealthy with substantial assets. is well-known with a good reputation C. O D. is new to the community with experience building elsewhere E. is incorporated with limited liability.Explanation / Answer
C. required these builders to post a surety bond should be included in the Legal remedies that might reduce moral hazard among small corporations that build condos.
If I am considering buying a condo in a new building, some of the characteristics of the builder would make more likely to buy are his reputation in the market and his transparency about the condo details.
C. is well-known with a good reputation is what a builder should be if I would be more willing to buy a condo from that builder.