HOA and Developer Being Sued

I need advice. I recently purchased a townhouse and a few days later learned that the HOA and the Developer of the community of townhomes has a large lawsuit (5M) pending that if awarded to the Plantiff the HOA and Developer would most like have to file BK. I need to know what happens to my townhome if that should happen. All comments are greatly appreciated. Thanks

Hi Rachel,

Do you have any idea what the lawsuit is about? Five million dollars is a huge amount of money, so it's hard to imagine what it's for. Someone can always sue for five million, but it doesn't mean they'll get that much.

Usually, big lawsuits like that are filed by the association against the developer for construction defects. To have both the HOA and the developer named as defendents is very unusual.

Your HOA should have insurance coverage that covers liabilities as well. Most HOAs don't have $ 5 Million worth, so hopefully it can be settled at a much more reasonable amount.