Condominium Litigation When Getting A Mortgage

October 7th, 2021

law books judge gavel

If a condominium has litigation against it, to get a loan approved there are certain things a mortgage lender has to document or the loan may be denied.

A mortgage lender has to prove that the litigation has no impact on the safety and structural soundness of the condo.

And the insurance carrier that insures the condominium building has to have agreed to provide the defense, and the amount of the litigation must be covered by the HOA’s insurance.

There are other reasons why litigation against a condominium may not be an issue, such as:

  • It is non-monetary litigation including, but not limited to neighbor disputes or rights of quiet enjoyment;
  •  the HOA is the plaintiff in the litigation and not the defendant;
  •  the reasonably anticipated or known damages and legal expenses are not expected to exceed 10% of the project’s funded reserves.Financing a condominium can be tricky for other reasons. Mortgage guidelines have the ability to change at any time, so always talk to a well-reviewed mortgage loan officer to make sure you understand the current guidelines and how they might apply to you.

Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

Tags: , ,

Leave a Reply