Your condo building is suing the developer for construction defects — congratulations, you effectively own a share of a lawsuit. So how much is that costing you, and what can you actually do about it?
I’m Jason Wong, Principal Broker at Island Dragonfly. In this video I break down the “litigation cloud” that hangs over condos in active construction-defect lawsuits — and the real dollars-and-cents impact on your sale.
Here’s the brutal truth most owners discover too late: when an HOA sues over structural defects, it usually triggers a red flag with Fannie Mae and Freddie Mac — the government-backed entities behind most U.S. mortgages. They often freeze lending on the building immediately. That means your buyer can’t get a standard 30-year fixed mortgage, FHA loan, or VA loan. Overnight, your buyer pool shrinks from everyone to a small group of cash buyers and portfolio-loan investors charging premium interest.
Basic supply-and-demand: when demand plummets and supply stays the same, price follows. We typically see a 10–20% value impact — sometimes more when the defects are serious (think “the balconies might fall off” serious).
In this video you’ll learn:
- Why structural-defect litigation freezes conventional, FHA & VA financing
- How the buyer pool collapses — and who’s actually left to buy
- The real value impact on a condo “subject to litigation”
- Why you legally CANNOT hide the lawsuit (disclosure of material facts is mandatory)
- Three strategic exits: price-to-move for cash buyers, rent-and-hold through the litigation, or a broker-guided sale
- How the right broker navigates the disclosure minefield and finds buyers who aren’t afraid of a little drama
Whether you own in Honolulu, Kakaʻako, Waikīkī, or anywhere across Hawaii — and whether you’re a local owner or an overseas investor managing a unit from 5,000 miles away — understanding the litigation cloud before you list can save you a painful surprise at closing.
📲 If you’re stuck in a litigious building, let’s connect for a confidential strategy session and complimentary valuation.
🌐 Personal: https://jasonwong.us
🌐 Firm: https://islanddragonfly.com
🌺 Bilingual service in English & Chinese (Cantonese/Mandarin). Asia-Pacific investors welcome.
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This content is for educational purposes only and is not legal, tax, or financial advice. Consult a qualified attorney regarding disclosure obligations specific to your situation.
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