Can Financing Happen Active HOA Litigation? | Fridays with Fred


    Are you buying a condo in Southern California? If so, you may encounter a condo community that’s currently in active HOA Litigation.

    Although it’s common for the answer to this question to be no, you can’t finance a condo with active HOA Litigation, the reality is that the answer to this question totally depends on the insurance policy of the Homeowners Association and what they are insured for.

    At Fred Sed Realty we’ve encountered two different scenarios recently that are a perfect example of this where two of our clients inquired about financing for condo’s in Southern California that currently have HOA Litigation.

    Different Lawsuits and Different Results

    Here in Southern California two different condominium communities are currently facing active HOA Litigation:

    Condo #1 – Someone slipped and fell outside a condo community and is suing the HOA for $1 million dollars.

    Condo #2 – An individual recently slipped and fell outside a Southern California condo community and they are suing the condo community for $140 million.

    What’s the difference between the two lawsuits? The answer is the insurance policy of either HOA.

    If Condo #1 has an insurance policy of $5 million dollars then a buyer can obtain financing for a condo in this community because even if the individual who slipped and fell won $1 million dollars, the HOA’s $5 million insurance policy would cover them if they were found liable and required to pay out $1 million.

    With Condo #2 it’s a different story though because if they have an insurance policy that’s less than $140 million dollars a buyer will not qualify for financing because if the HOA was found liable their insurance policy would not cover this amount.

    Contact Fred Sed Realty

    Learn more about HOA communities, or view Southern California homes for sale by contacting Fred Sed Reality today by calling us at (800) 921-9231 or connect with us online.

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