Boards and property managers are seeing a host of new questions from prospective condo and townhome lenders. Lenders with mortgages backed by Fannie Mae and Freddie Mac are already (or soon will, in the case of Freddie Mac) requiring associations to provide extensive answers to questionnaires regarding the association’s finances, the building’s structural integrity, reserve studies, potential maintenance, and building code issues. If you have not already seen these new questions, you undoubtedly will, as most loans in the U.S. are backed by either Fannie Mae or Freddie Mac.
The question our clients are asking is: Should the board or management be required to provide answers to these legal questions?
The answer is that boards should have a policy in place for completing the forms and questionnaires for the good of the association. Refusing to complete the questionnaires will limit loan options to buyers, which will reduce the number of purchasers and could hurt the market value of the units in the association.
Our firm has a solution for managers and boards. The process will involve some front-end work by management and the board, working with legal counsel, to create a clear process for completing the forms with the assistance of your attorney. Let our firm help your association develop the process so that the board can answer the questions, assist with new purchases, and protect the association from liability in the process.