Regarding the condition of, exaggerate (9)
I believe the answer is:
overstate
'exaggerate' is the definition.
(I know that exaggerate can be written as overstate)
'regarding the condition' is the wordplay.
'regarding' becomes 'over' (over can mean regarding or about).
'the condition' becomes 'state' (the state something is in).
'over'+'state'='OVERSTATE'
'of' acts as a link.
(Other definitions for overstate that I've seen before include "lay it on thick" , "Exaggerate, go beyond bounds of truth" , "Exaggerate, make too much of" .)