Sunday, December 14, 2014

Filling out lender and title agency questionnaires-should your community association take the extra step?

With growing frequency, volunteer community association board members and association managers are being asked to fill out lengthy and often complicated paperwork on behalf of business entities who are looking to evaluate the value of a particular community.

Your board may receive a request from a lender or title agency (or the attorney for either of the foregoing or for the owner looking to sell or finance his or her home) asking you to fill out a questionnaire which assesses the community's overall condition including disclosing the number of delinquencies, violations, and leased properties among other items. The more brazen of these requests may include language which states that you are providing this information "under penalty of perjury" and that your statements are being relied upon by the company requesting same in order to make that loan or write that insurance policy.

Just last week, I received a request from an insurance company asking one of my clients to guarantee that a policyholder's home was protected 24/7 by armed guards.

Some boards and managers are rightfully reluctant to serve the role of quasi-risk assessment officer for a business entity. However, when an association balks at filling out this paperwork, the typical reaction from the entity requesting same (or from the owner) is that the association is tortiously interfering with the contemplated transaction. Of course, the next sentence usually contains some threat of legal action.

How should your board react to these kinds of requests?

In fact, the Florida shared ownership statutes do not require boards to fill out these questionnaires. The Condominium Act, for example, provides in Section 718.111(12)(e), that an association or its authorized agent is not required to provide a prospective purchaser or lienholder with information about the condominium or the association other than information or documents required by the Act to be made available or disclosed. The Condominium Act further allows the association to charge a fee up to $150 plus the reasonable cost of photocopying and any attorney's fees incurred by the association in connection with preparing a response. Lastly, the statute specifically states that neither the association nor its agent are liable for providing such information in good faith if the response includes the following statement:

"The responses herein are made in good faith and to the best of my ability as to their accuracy."

Even with the ability to charge for the preparation of a response and the statutory protection from liability, some association boards and managers may feel that providing such information could fall under the category of "no good deed going unpunished" should the entity later attempt to recoup losses against the association for the representations it made.

Every one of these questionnaires is slightly different so do speak with your association attorney prior to attempting to fill one out. Your board may also wish to create a policy on which requests will receive responses, which it deems unduly burdensome or risky and the fees it will charge.

No comments:

Post a Comment