A good question with some equally good responses. I particularily liked Grace's thoroughness. To add to this;
There are still a couple of lenders out there that do not seek a certification, but all will check for red flags, the notices that go out showing if a complex is in the middle of a lawsuit.
The reason that lenders even care (as should you) is that if a complex is being threatened or is in the middle of a lawsuit, there is no way to tell the financial impact once the lawsuit is settled. Some lawsuits can be small and specific in nature, but many can impact the complex with thousands of dollars in repairs or settlement costs.
Those costs not covered by reserves most often end up going out to the owners in the form of an assessment as well as an increase in the HOA fee. I have seen many assessments in the $4,000 to $8,000 range (per owner!) for balcony repair (dry rot, water damage) as well as common area upgrades (for safety), earthquake retrofit and entire roof replacement. It is this unknown financial impact that does not allow banks to accurately qualify the buyer. Buyers are qualified based on current monthly debt payments plus the entire house payment - PITI (Principal, Interest, Taxes and Insurance) as well as the HOA.
These lawsuits are common and here is why: Most residential developments, including townhouses and condominiums, are covered by a 10 year warranty by the developer. in the 9th year (or thereabouts), attorneys will go the HOA and ask for permission to do a "tear-down" inspection of the complex. If the HOA declines, then the attorney makes it clear that if something does then pop up later on, they will be sued. Most HOA's comply.
What can happen next is that the attorney hires a firm to dissasemble parts of the complex actually looking for issues within, such as structure construction, foundation, plumbing - even nail patterns are inspected to find defects or faults. Something is inevitably found and the complex is sued.
State Senator John Burton supported a bill - SB 800, that now allows most complexes to work to correct the issue without having to go to court over it. It sets standards and mediation for most complex issues. You can find a copy with this link: http://www.northstatebia.org/documents/litigation/CBIA%20SB8
Bottom line - even though it may be a nice complex, understanding the final impact of any lawsuit as it pertains to the complex (the bottom line being the owner of course) should be critical to how you make your decision to purchase.
Hope this helps my friend.