In a rare move, the 4S Ranch Master Association filed suit against 4S Kelwood General Partnership, the developer of the commuinity west of Rancho Bernardo in unincorporated San Diego County. An executive for Kelwood said the suit focuses on trees and common area walls, but Realtors said its mere existence made lenders leery of giving mortgages, creating headaches for buyers.
Construction lawsuits are common in San Diego, but complaints from the master plan association are unusual because they cover so many more houses and condos.
Unlike for houses, lending documents on a condominium include a check box which indicates whether a construction defect lawsuit has been filed on the property. For many lenders, just seeing that box checked will cause them to deny a loan.
Some lenders will still give a loan, but they'll often require a much larger down payment, making it harder for a typical condo buyer to close the deal. When the pool of buyers for a property diminishes like that, prices can drop.
"The lawsuit does not cover anything in the units in itself, it has to deal with common area improvements ---- walls and landscape." some of the street-side walls had cracked, and some of the trees had not done well in the 10 years since they'd been planted.
"It will create challenges for many people trying to create financing,"
