Hi Jean Paul,
First rule of condo construction is not whether the builder will get sued, but when they will get sued. Many condo associations are involved with litigation for defects. This does not mean your client cannot get a loan. What you have to do is ask for a copy of the legal proceedings and see how significant the defects are and determine how your client may be effected.
As a general rule of thumb, have an accountant look at the HOA financials to see whether they are solvent and in compliance with the rules for reserves, etc. Due to the economy over the past 5 years, many HOA's have dues in arrears and are suffering financially as a result.
Lastly, if your client chooses to move forward, if the builder wins the law suit will there be a special assessment to correct the defects and how much? Even if the HOA wins, there still may be a special assessment to cover the different of the award from the builders insurance and the amount to correct the defect.
We hope this helps,
Mark & Kari Shea
Shea Real Estate
Home Sales Specialists; New and Resale Homes
Property Valuation Specialists
Land Sales, Acquisitions & Consulting
Serving Greater San Diego