Can potential construction defects hurt the resale value of condominiums in California? That is the question many condo owners in Dublin, California are probably asking themselves right now. Many homeowners’ associations for condos and townhomes in this city have filed lawsuits against the construction company for alleged construction defects. More than half the condos and townhomes listed in the Multiple Listing Service have pending litigation against the construction builder, which is unusually high for one city.

The HOAs are trying to settle the lawsuits with the builder over the alleged defects. If the condo associations are unable to get a settlement that can pay for all the repairs, the litigation could drag on much longer than condo and townhome owners would like.

Does pending litigation against the builder of your condo hurt your resale value? It definitely doesn’t help it. The price of the condo may not necessarily be impacted but pending litigation over defects can definitely lead to fewer prospective buyers interested in the property. In addition to buyers worrying about potential construction defects in their new home, some buyers will not or cannot afford the higher loan rates that are often associated with condos that have pending litigation.

When condo associations file a lawsuit over construction defects against the builder, every homeowner can be impacted. This is an unfortunate case of how construction defects can harm a homeowner’s ability to sell their home for top dollar as well as make them question the safety or functionality of their new home.

Source: Around Dublin, “Are Alleged Massive Construction Defects Hurting Condo Resale Values in Dublin, CA?” Vickie Nagy, Feb. 20, 2014