OT: HOA pending litigation

[Jessica]

I am thinking of making a cash offer on a condo with HOA pending litigation in UTC area. What is the risk of buying such a property as a rental?

[svelte]

Doesn’t that depend on the nature of the litigation?

[ocrenter]

[quote=svelte]Doesn’t that depend on the nature of the litigation?[/quote]

Yeah, for example, pending litigation because the HOA permitted an untrained resident to patrol the complex armed and he ended up killing a teenager walking with skittles and ice tea. Vs pending litigation against a delinquent owner who failed to pay HOA dues…. Very different indeed…

[EconProf]

Back to the subject:
Svelte is right–it depends entirely on the nature of the litigation. Such potential liabilities can drastically lower the price of the condos, giving you a windfall bargain if the market is unduly fearful. The fact that you can pay cash further helps your negotiating position. BTW would you be paying cash because this is one of those developments lenders won’t lend on because of a high percentage of renters? That can further knock down the market value.
Tell us the nature of the pending litigation–how big, probability of success, etc.

[Jessica]

HOA pending litigation for construction defects (plumbing and thin walls?) affecting the entire complex. I am still searching for the history and the current status of the pending litigation (lawyer has not answered my calls yet). They only accept cash offers since no bank approves loans on the complex with HOA pending litigation. Thanks for those of you trying to help.

[UCGal]

[quote=Jessica]HOA pending litigation for construction defects (plumbing and thin walls?) affecting the entire complex. I am still searching for the history and the current status of the pending litigation (lawyer has not answered my calls yet). They only accept cash offers since no bank approves loans on the complex with HOA pending litigation. Thanks for those of you trying to help.[/quote]
Here’s a way to get at last *some* info on where the litigation stands.

http://courtindex.sdcourt.ca.gov/CISPublic/namesearch

Select civil for case type
select unknown/all for court location and party type

Plug in a party name (HOA’s name would probably work).
If it doesn’t find it – try variations on the HOA name. Or just a partial name.

If there’s a hit – you should be able to harvest the case number. It will look something like
“37-2012-000xxxxx-SC-SC-NC”

Take that number and plug it into the register of actions.
http://www.sdcourt.ca.gov/portal/page?_pageid=55,1&_dad=portal&_schema=PORTAL
– select registor of actions. Agree to terms of use, select icon to make sure you’re a person.

It pre-fills with the 32-2012… if the case is 2011 or older – modify to reflect that… Plg in the “000xxxxx” number you harvest.

This should give you an idea of what actions the various parties are doing. You can order some of the documents online (for a fee).

Even without ordering the documents you can get a good idea if the case is stalled or moving through the system.

I *love* public databases.

[bearishgurl]

[quote=Jessica]HOA pending litigation for construction defects (plumbing and thin walls?) affecting the entire complex. I am still searching for the history and the current status of the pending litigation (lawyer has not answered my calls yet). They only accept cash offers since no bank approves loans on the complex with HOA pending litigation. Thanks for those of you trying to help.[/quote]

If I were you, I would stay as far away from this complex as possible. If the HOA prevails in the lawsuit, they will likely NOT be able to replace every piece of the faulty (PBT?) plumbing. When it bursts (and it does) it floods affected units and eventually mold begins growing between the walls.

“Lawyers” are not going to return your calls. You need to look the case up yourself and pull up the register of actions to see where it is if you are really interested in finding out. It takes years to litigate these claims due to the number of defendants. Each defendant is handled separately by the court and eventually most are dismissed from the case. Here is the link for SD County:

https://roa.sdcourt.ca.gov/roa/

[bearishgurl]

Yes, follow UCGal’s link first (to get case names) and then follow mine to find out what is currently happening on the case.

[bearishgurl]

Jessica, if you have cash for a condo, why are you considering complexes which are in litigation and thus virtually unsaleable today and un-resellable in the future? There is a LOT out there to choose from!

Even if you only have enough cash for a small or cheap condo, why not consider better-built complexes or ones that have stood the test of time (w/o ever having to litigate). If you have to take out a small mtg to buy something worth owning, would that be so bad?

PBT plumbing was predominately used in SD County construction between 1980 and 1984, with an occasional year before that and up to two years after that. After multiple class action suits by HOAs and individual owners, the manufacturers of the PBT pipe settled with each affected owner in the class for about $4400 in 1994. The lawyers were the only ones who really “won” in these mammoth cases around the nation!

Previous posters are correct that if there are currently only small claims suits to collect delinquent dues, this is acceptable unless there have been more than 12 of them in the past five years.

The first thing you need to do upon an accepted offer on a condo is to get your competent inspector out there pronto and order the HOA financials. Have contingencies in your offer for both. If the seller will not accept these contingencies, move on.

This is why I don’t believe attached condos are good investments.

[EconProf]

Condo developments can fall into a vicious cycle when a high % are rented out and lenders refuse to make loans on the units. This erodes prices and makes for a situation where only investors and absentee landlords buy, further worsening the environment as few owner-occupiers remain to keep up the place, serve on the HOA board, enforce rules, etc. The downward spiral cannot be arrested because none of the participants have the power to interrupt the process. I’d stay far away from this purchase if I were you. Urbanrealtor and sdr may have input to add, as this is their arena.

[HLS]

IMHO the WORST property anybody can buy is a condo for a rental.
(In a casino they call this a sucker’s bet)

Buying in a complex with litigation is just rolling the dice. Do you feel lucky ?

[bearishgurl]

[quote=HLS]IMHO the WORST property anybody can buy is a condo for a rental.
(In a casino they call this a sucker’s bet)

Buying in a complex with litigation is just rolling the dice. Do you feel lucky ?[/quote]

Absolutely, unequivocally agree with this …. unless they are detached “PUDs.” And those assns are a big “maybe,” depending on solvency of the association and a host of other factors.

[Jessica]

Thank you all for your info and suggestions. Agree to stay away from troubles.

[sdrealtor]

econprof provided the real reason to stay away. Its a vicous cycle. They sell for less because you need cash. As soon as they become financeable the prices rise. The problem is that when they require cash for an extended period of time owner occupancy drops making the day they can be financed that mcuh further away.

[Cube]

Was this one of the apartment complexes that underwent condo conversion during the boom?

[Author]

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