| Why is it so difficult to Finance a Condo in Litigation? |
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Financing a condo in litigation is, more often than not, impossible. Typically, your only option is buying in cash. The reason why banks steer clear of these condos with lawsuits attached to them, is that lawsuits are typically followed by liens and no lender wants to lend on a property with an encumbrance (a claim against a property). The same goes for a single family home with a lien on it: lenders won't touch it 'til the lien is cleared. The unfortunate thing about a condo being litigated is that everyone in the building gets hurt. With lending frozen, unloading a property for an owner becomes that much more difficult.
How Does a Condo end up in Litigation?Usually the case is that an owner is suing the builders for property defects. However, contractors can also put mechanics liens on the property for unpaid work.
If there are Multiple Buildings in my Condo complex and another building is in litigation will I be affected?This depends on how the builders legally organized the buildings. If you are in a complex made up of several high rises, with each high rise having its own HOA (Home Owners Association), and built under its own LLC. In a case like this, if you are in a building that is not in litigation, then you should be fine. An example of this would be Turnberry Towers in Las Vegas. Turnberry is comprised of three highrises, one of which was in litigation. The remaining two were not in the same situation, and for these buildings, financing was not an issue due to the legal organization of the project.
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