HOAleader.com - Tip of the Week - February 15, 2013
Published: Fri, 02/15/13
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HOA Boards: Beware Lenders' Questionnaires
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Collect More, and Collect It More Easily:
Best Practices for Condo/HOA Debt Collection
An HOAleader.com Webinar for Condo and HOA Boards
Thursday, March 21, 2013
2-3 p.m. Eastern
Register now or learn more:
http://www.hoaleader.com/snip/149.htm
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In this week's tip, we provide a timeless
warning: Loose lips sink ships.
Translated to HOAs, that means you should
be careful when answering those questionnaires
lenders send over when they're evaluating
whether to approve a potential buyer's loan.
"We're seeing questions like, 'Is there
any special assessment pending or being
considered?' and 'Are there any known
structural defects?'" says Carra Clampitt,
a vice president who supervises Northern
California operations at Eugene Burger
Management Corp., a Rohnert Park, Calif.
-based company that manages about 20,000
condo and HOA units. "Those, sadly, are
becoming common questions."
The danger is assuming you have to answer
every question presented and then answering
one unwisely. "People are sometimes misled
by preprinted forms," says Jonathan B.
Levine, owner of the Law Firm of Jonathan
B. Levine, a Milwaukee firm that represents
about 200 community associations. "They
think every lender or title company asks
the same questions, and that's not so.
Some lenders and title companies overreach,
and the fact that they ask something on
a form doesn't mean you have to answer.
Those companies want the business from the
sale of that property, so if you tell them
to do their own work, they will."
Levine has consistently warned clients to
be wary of lenders' questions. "I was always
telling clients they had to be careful how
to answer," he says. "They needed to hear
from me that they're not parties to the
transaction between the buyer and seller.
They have no upside to answering the form,
but they potentially have a substantial
downside."
During the financial crisis, Levine began
seeing even more questions that made him
uncomfortable. "Then I became very sensitive
to the issue when a client was threatened
with a lawsuit for answering a question
incorrectly," explains Levine. "The question
was whether the association had a right of
refusal regarding the sale of a property,
and it was answered incorrectly in the opinion
of the seller. The lawsuit didn't occur
because I was able to defend the association
pre-lawsuit. But my view was if sellers or
lenders want to ask a volunteer to interpret
association documents, they get what they
pay for. They should read the documents
themselves."
What questions should give you pause? And how
should you answer when you think a lender is
overreaching? Get the 411 in our new article:
http://www.hoaleader.com/members/818.cfm
Best regards,
Matt Humphrey
President
P.S. Don't miss our live webinar on best practices for HOA debt
collection, March 21 at 2pm! Register now or get more info:
http://www.hoaleader.com/snip/149.htm
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