I'm not a real estate attorney, so instead I will give you a scenerio that I found online:
The builder went bankrupt, leaving landscaping, water, sewer, & trash debt.
The 9 Condo owners purchased units between May and August 2007 (I was Aug 24) and the builder filed bankruptcy mid-October. The Property Management Firm (PMF) has not lived up to the promised service levels and says that Water Sewer & Trash service is about to be cut off for excessive owing debt by the bankrupt builder. The PMF has potentially been using our dues to float the debt. It was not disclosed to me when I closed on my condo that I would be responsible for the builder's debt. What I was told was that the HOA dues were calculated based on a 200 unit occupancy to support a future pool, without an increase in HOA dues.
Well there is no pool, I don't even want one, but the Property Management firm is telling us now that we will have to vote on a new budget to increase HOA dues. I was under the impression that the dues should be put into an account, pay for the current services, and if the builder racked up some debt, that it should be petitioned in bankruptcy court.