"SUIT HURTS CONDO SALES" Blare the headlines…

This mornings headlines on my news feed featured this condo in Denver…

Suit hurts condo sales
Beauvallon HOA fights developer
By Margaret Jackson
The Denver Post
Article Last Updated: 05/30/2008 10:22:44 PM MDT

Owners with units for sale in the towering Beauvallon building at East 10th Avenue and Lincoln Street are struggling to sell their units because a lawsuit against the developer is dissuading potential buyers and hanging up financing for anyone still interested.

The suit, filed by the homeowners association, stems from alleged construction defects in the two-tower European-style condo building. It adds an extra layer of difficulty for owners already grappling with a deflated housing market and competing with lower-priced foreclosures in the building.

“If there’s a lawsuit between the builder and the HOA, most lenders will not lend on it if it’s in process and not resolved,” said Chris Starks, senior loan officer at First Class Financial Services. “They’re just trying to protect themselves. That’s just standard lending practice.”

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Of the 26 properties listed for sale in the 210-unit Beauvallon, 12 are either in foreclosure or listed for less than the seller owes on the mortgage. Some real estate agents said they have cautioned their clients about purchasing in the building.

Several residents and sellers in the building declined to comment on the building or the lawsuit.

The lawsuit, filed last year against developer Craig Nassi and BCN Development, Swinerton Builders, Darlene Sandoval and Big Horn Plastering, gives a laundry list of problems with the building.

Improperly installed copper and metal roofing resulted in water damage to the penthouses and other units. Water damage to the units also occurred because of improper installation of exterior wall vents, balconies and decks, according to the lawsuit.