What does it mean when an HOA is in litigation?
Reviewed by the OurHOA team · Updated June 2026
What it means when an HOA is in litigation - the impact on owners and buyers, disclosure duties, mortgage and financing fallout, and how to find out the details.
What 'in litigation' actually means
An HOA is 'in litigation' when the association is a party to an active lawsuit - either as the plaintiff (suing someone) or the defendant (being sued). The label covers a wide range. Routine matters, like the HOA suing a delinquent owner to collect assessments, are common and usually low-stakes for everyone else. More serious matters - a construction-defect suit against the developer, a fair-housing or discrimination claim, an owner suing the board, or a major contract or insurance dispute - can have real consequences for every homeowner. The first question to ask is always: which kind is this, and is the association suing or being sued?
Why it matters most to buyers and owners refinancing
Pending litigation is one of the biggest reasons a condo or HOA project becomes hard to finance. Fannie Mae and Freddie Mac generally will not back a loan in a project tied up in certain litigation - especially anything involving the safety, structural soundness, habitability, or functional use of the project. When a project is flagged 'non-warrantable,' buyers can lose access to conventional financing and may need a costlier portfolio loan, which shrinks the buyer pool and can dent values. Lenders learn about this through the HOA questionnaire (such as Fannie Mae Form 1076) the association completes during a sale or refinance. Minor or routine litigation - like a standard collections case - is often acceptable; material litigation is the problem. Our guide on whether HOA problems can stop you from getting a mortgage or refinance goes deeper on warrantability.
The association usually has to disclose it
Owners and prospective buyers generally have a right to know. Pending litigation typically must be disclosed in the resale or estoppel package a seller provides at closing, appears in the association's official records that owners can inspect, and shows up on the lender questionnaire. Many states and governing documents also require the board to keep members informed about significant suits. If you're buying into a community, read the resale documents carefully and ask directly whether the association is a party to any active litigation and, if so, what it's about and what it could cost.
What it can cost owners
Lawsuits are expensive even when the HOA is in the right. Legal fees, expert costs, and insurance deductibles come out of the budget, and a large or uninsured judgment can force a special assessment - a one-time bill split across all owners. On the other side, a successful construction-defect recovery can fund overdue repairs and actually help the community. The point isn't that litigation is always bad; it's that owners should understand the potential financial exposure rather than be surprised by it. Reviewing reserves and recent financials alongside the litigation tells you whether the association can absorb the cost - our guide on how to read HOA financials shows what to look for.
How to find out the details
Start with the association's records: board meeting minutes often reference litigation, and most states give owners a statutory right to inspect official records (with narrow exceptions, sometimes including attorney-client-privileged material about the active case itself). Request the resale or estoppel package if you're buying, and ask the board or manager in writing for a plain-English summary of any pending suit. Our guide on how to request HOA records explains the process, and if you're weighing action against your own board, see when you can sue your HOA.
How OurHOA helps
Litigation rattles a community most when owners feel kept in the dark. OurHOA helps small self-managed boards keep clean, accessible records - minutes, financials, and disclosures - so owners and buyers can get a straight, consistent answer about where things stand. Transparency won't end a lawsuit, but it keeps trust intact while one is pending, and it makes the disclosure obligations at resale far easier to meet.
OurHOA is the friendly, affordable way self-managed communities keep dues, records, and reminders in one place. See how it works.
These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.