Associations and association managers routinely receive what are referred to as lender questionnaires on a regular basis.
A lender questionnaire is usually a request from a bank, lending institution or title company that requests the Association provide information about the community to the lender. Such requested information generally includes request for information concerning the community make up, collection procedures, community delinquency information, recreation areas, etc. More recently, requests from Fannie Mae and Freddie Mac have requested the Association provide information regarding the structural integrity of the building, reserve analysis reports, pending code violations, etc.
Associations are not required by law to provide a prospective purchaser or lienholder with information about the association other than information or documents required by the statute that governs such association. This generally means the Association is only required by law to provide estoppel information as required by the pertinent statute and a few other pertinent documents such as the Frequently Asked Question and Answer Sheet.
There are slight differences in the statutes for Condominiums, Cooperatives, and Homeowners Associations regarding the documents which must be provided and liability for misinformation. In the Condominium statute, for example, there is specific language which must be used to attempt to protect the Association from potential liability.
In recent versions of these questionnaires, Fannie Mae and Fannie Mac have added questions requesting the Association to provide information regarding the structural integrity of the building, reserve analysis reports, pending code violations, etc.
Generally, board members, managers and even the association attorney are not in a position to provide answers to these questions, and the Association is not required to provide answers to such questions. It has been my experience that most loans will close even if the specific questions are not responded to.
If the association does respond to these structural questions, it should be the association engineer that provides such responses. Some of the questions cannot be answered – questions that ask if there will be any violations in the future, for example.
If your association decides to respond to the lender questionnaire, before it just routinely responds to these lender questionnaires, take a close look at the questions; and engage the association’s attorney and engineer to answer the appropriate questions within their fields of expertise.