Some San Diego real estate buyer agents don't know how to advise their clients when they're looking at a San Diego condo with pending litigation. If you are a buyer getting a loan with 20% down or less, here's what I think you need to know:
There is NO (legitimate) conventional or FHA financing available when a condo complex is in litigation. Agents want deals to close, so sometimes they get bad information because of wishful thinking. There are lenders who promise they can get buyers a normal conventional loan in buildings with litigation.
What is happening here is that NO ONE is telling the lender there is litigation. The problem with that is it's your obligation to tell your lender about litigation if you are aware of it.
Wait, what!?!? The loan officer is pushing it through without telling the lender?! The buyer's agent is pushing it through without telling the lender?! But it's the buyer's responsibility?!
Sure, the agent and loan officer may also be at fault (I'm not an attorney, so I'm not offering legal advice here), but buyers should know they are probably committing a sort of fraud when they purchase a condo in a building they know has pending litigation without disclosing the litigation in writing to their lender before completing the transaction.
Here's the deal: Some lenders don't officially ask every HOA about litigation (why, I do not know). Even if the lender doesn't ask, the buyer must tell them about litigation. Nothing may ever come of it (not telling your lender about litigation), but you the buyer need to be aware that you're taking a risk if you do go through with the purchase.
Of course, there are other lenders out there who will do a legitimate loan (some private lenders, and maybe some banks who are willing to do the loan at a higher interest rate), but it will NOT be conventional financing. The conventional guidelines simply do not allow a loan in a building with litigation in most circumstances.
There are many complexes in San Diego that go through litigation at one point or another, so buyers should know how it affects them. Cash buyers... do whatever you want. You don't have a lender to worry about. Just make sure you know what you're getting yourself into (how the litigation might affect you financially down the road) before you complete the transaction.
If you are a potential San Diego condo buyer, buying between $500,000 and $5,000,000, with excellent credit, and want an experienced buyer's agent who understands the complex issues facing buyers in today's market (and who is looking out for your interests at all times), consider hiring yourself an Exclusive Buyer Agent! Give me a call today at 858-437-2662.
Justin Gramm is the founder and principal broker of Globella Buyers Realty, your San Diego Exclusive Buyer Brokerage. He also writes this blog, "For San Diego Home Buyers."
Exclusive Buyer Agents do not list homes for sale and never represent sellers. They have no "inventory" to try to sell you. They can represent you in purchasing any home. They are specialists at representing buyers only on the buyers' side of the transaction. Exclusive Buyer Agents work to get buyers the best price and terms when they buy a home.
If you have excellent credit and plan to buy a home or condo in San Diego County within 90 days, contact Justin Gramm to hire an agent on your side of the transaction. Call Justin at 858-437-2662 or E-mail.