Could be collections (debtor or debtee), builder defect, slip n fall, repair liabity, board malfeasance or, knowing some homeowners, too much dog poop.  

Due to an interest only mortgage that was held on to for quite some time, the principle was not paid down very quickly, and to make matters worse, the property was in pending litigation for defects.  

It sets a "defect" mentality in their minds.

Many tenants do not take landlords seriously until they receive a letter from an attorney.A letter from an attorney letting them know that landlords are not responsible for curing defects that tenants intentionally caused and that (a) you break early and pay these fees or (b) we don't let you out of your lease.That said, I think you should make sure you have a lawyer write it.  

You usually only have a warranty on new homes and up to 10 years for hidden construction defects.

If you legitimately found previously unknown defects you should simply inform the seller of said defects along with a professional bid to remedy.

Usually, the same contractor built most or several of these houses, and likely most of them have the same defects. 

When you look at a foundaton and can identify one problem with the foundation typically there can be from 30 to 50 other problems associated with that foundaton defect, and non of them cheap or quick to fix. as @Mike Castellow mentioned above it may just be a matter of finding the right person to work with in dealing with foundation problems.

Liability could be that he returns a defective range, some piece of junk he picks up at the dump.

Can have some cosmetic issues - doesn't have to be the prettiest building on the block - actually prefer one to fix up - only cosmetically - no structural defects.