Downside to buying a brand-new condo - Lawsuits, assessment fees become major issues
When shopping for a condominium, brand-new condos have the widest appeal to prospective buyers. However, buyers of brand-new condos should be aware most new buildings have construction defects. The best builders and developers quickly correct any construction problems. However, many defects aren't discovered until several years later.
Then it is up to the homeowner's association, or HOA, to sue the builder and/or developer to remedy the construction defects. Reportedly, more than 80 percent of California condo HOAs have brought construction-defect lawsuits against their builders and developers. When a HOA is involved in a lawsuit, most mortgage lenders refuse to originate new mortgages in that condo complex, thus virtually halting resales except to all-cash buyers.
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