Homeowner Confirmation

Started by MarqA1 • 2 replies • 1045 views

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MarqA1 (Michigan)
Posts: 24

Posted:

So this week we received a request from a lending institution looking for some information on a refi for one of the homes in our HOA.

It was a little different from what we've seen so our secretary was questioning the specifics.

Basically the four items below.

1) No pending litigation? Assume any open issues between HOA and resident?
2) No Right of First Refusal (defined as a right given to a person to be the first person allowed to purchase a certain object if it is ever offered for sale? Never seen this, maybe something to do with a co-op?
3) No one entity owns 10% or more? Another co-op question?
4) Also they want to know which company holds the Master Insurance Policy? Figure this is just to confirm that there is a policy on the common elements.

BTW, our association is made up of 21 single family un-attached homes and our only common elements are the roads!

Any feedback welcome!

LarryB13 (Arizona)
Posts: 4,099

Posted:

Marq,

It sounds like the lender has a one-size-fits-all questionnaire; some of the questions would be more applicable for a condo.

1) No pending litigation? This would cover any lawsuits in which your association is a party.

2) No Right of First Refusal? This is far more common than you might think but is nearly always limited to condos. It interferes with sales while the board deliberates whether they wish to purchase the unit at the price the seller has accepted from an outside buyer.

3) No one entity owns 10% or more? Another condo question. Many condos are owned by one person who can control the board - and they usually do not even live there.

4) Also they want to know which company holds the Master Insurance Policy? This sounds like another condo question. In a condo, the building(s) are jointly owned by the unit owners so there is normally a master insurance policy on everything outside the individual units. Homeowners policies cover only the interior of the units.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Marq,

Those are standard questions we have been asked.

We have created a PUD statement (which we update twice a year) to answer most of them.
We have had our insurance carrier issue a certificate of Insurance in our name to us which we provide those who ask (as this shows what insurance is carried and in what amounts).

Once you have these things together, a response takes less then a minute via email.

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