If you read the chapter suggested by Vitalii, I think the conclusion would be that some amount of overdesign is desirable, and that the only negative consequence is increased cost.

I've read in the past that possibly another negative consequence of overdesigned condensers and/or evaporators is that the duty cycle of the system may become too short, for optimal performance. Let's say we are discussing an air conditioning system. If the temperature of the ambient air is lowered too quickly, the duty cycle is shortened. Such a shortened duty cycle may mean that the cool and dry air is not circulated as long as might be ideal, to remove excess humidity from the entire space.

In reality you should never over design. You should always agree your design basis taking into account the design needs and agreed factors of safety etc. and design on this basis.

If you design outside the parameters of this then it is bad design.

ou should always design to the required duty. This may or may not include for further expansion or turn down depending on the project requirements. This being said it is still not over design, just project requirements.

If a heat exchanger is overdesigned, heat duty will increase, resulting in higher coolant exit temperature and lower hot fluid exit temperature. For a condenser, provided that the vapor mass flow rate  is limited/constant, the condensing vapor pressure will decrease and the heat duty remain almost unaffected.