5.2 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?

If you were considering buying a condo in a new building, what characteristics of the builder would make you more likely to buy? Explain.

(Hint: See the Mini-Case, “Capping Oil and Gas Bankruptcies.”)