Nevada has a mandatory form (required of all sellers) known as the Sellers Real Property Disclosure that asks the question: has your property ever been subject to a claim or lawsuit filed regarding construction defects? In a perfect world, everyone answers honestly and we all go about our business. However, when you live in a property governed by a homeowners association, this tends to complicate the issue.

While a seller may have never filed any such claim on their personal residence, the association may have at one point filed a claim against the developer; and actually won damages to fix defects. This can and does cause problems with financing particularly when dealing with condos and town homes. These defects can affect common areas like block walls but can involve issues like Kitec plumbing.

Whatever the case, if you are trying to obtain government financing on such a unit (FHA or VA loans) or even if you are trying to purchase a single family residence where the governing HOA (homeowners association) is involved in a law suit; you may have some special problems to address. Some of these issues can be resolved by a statement from the attorneys detailing the scope of the defective issues and whether or not they directly involve the unit in question. However, we have discovered instances where we must go to an outside private lender in order to obtain financing on properties until such time as the suits are settled.

Once again, due diligence on the part of buyers and agents is important!