Condo Media - August 2009 - (Page 36)

MANAGEMENT by Richard E. Brooks, Esq. Lender Affidavits/Questionnaires Letter and Form Address Concerns everal years ago, a property manager and board of trustees were sued by a unit owner who claimed the information provided on the so-called Fannie Mae Affidavit/Lender Questionnaire was incorrect. The Appeals Court ruled that: the association and manager were responsible for the information on the questionnaire, the information regarding a special assessment was incorrect and the manager and association were liable for negligent misrepresentation. The unit owner claimed he bought the unit relying on the statement that there were no special assessments pending. At the time the questionnaire was filled out, there was no special assessment pending and the association had not voted on a special assessment. And, the association maintained the unit owner did not read the questionnaire, nor did the owner rely upon it when purchasing the unit. However, the court decided the association was responsible for the unit owner purchasing the unit without knowing about the future $6,000 special assessment, and that the unit owner should not be responsible to pay this special assessment. Property managers agreed that a questionnaire needed to be completed to facilitate lending to condominium owners, however, managers and associations could not subject themselves to liability to make the loan process more efficient. contained therein and specifically stating that a potential buyer may not rely upon the questionnaire. At first, this new questionnaire met a lot of resistance from the lending community, which was accustomed to having its own form filled out. Fortunately, associations and managers were willing to stand their ground on the issue, and refused to fill out the lenders form; eventually, the lending community became aware of the condominium associations’ concerns and, after awhile, the questionnaire drafted by the attorneys’ committee was accepted by the lending community. In addition, to expedite the acceptance of this original 2003 form, I forwarded the attorneys’ committee questionnaire to in-house counsel at Fannie Mae in Texas who advised that the new form was satisfactory to Fannie Mae. Although there were still occasional questions regarding the use of the attorneys’ committee questionnaire, it had become the custom for most associations to use this form until recently. tinue to use the attorney’s committee questionnaire or a form like it to limit their liability. In addition to the question of liability, discussions also have centered around why the questionnaire should be filled out without a legal requirement to do so, and the costs associated with completing the form. Throughout the closing process, other providers of information for the closing are paid a fee for that information, so why should association managers spend time and effort — and expose themselves to potential liability — without being paid for their time? One last argument for using your own form is that you are much more certain the information is accurate, and you will not be answering questions when you may not be certain of the answer. CM Richard E. Brooks, Esq. is a partner in the law firm of Marcus, Errico, Emmer & Brooks, P.C. in Braintree, Mass. Editors Note: As condominium managers and boards are being asked to answer more lender questions, calls to the CAI-NE chapter office and to condominium attorneys prompted one Massachusetts attorney to provide an opinion and response. With permission, a copy of the letter from Stephen Marcus, Esq., a partner in the law firm of Marcus, Errico, Emmer & Brooks P.C., is printed on page 37. In addition, the revised and updated CAI-NE attorneys’ committee lender affidavit/questionnaire is on page 38. Associations and managers should always consult their legal counsel with questions regarding lender affidavits and questionnaires. S Lending Guidelines and Form Updates With the 2007 and 2008 changes to Fannie Mae lending guidelines, associations and managers are being asked once again to complete lender affidavits and questionnaires that are often times much more comprehensive. In response, the attorney’s committee questionnaire has been updated and revised. Since the Appeals Court decision that the association and manager can be liable for negligent misrepresentation, it is even more important for associations and managers to con- A Form of Our Own In early 2003, the CAI-NE attorneys’ committee responded to these concerns and drafted its own form of questionnaire that included language limiting liability for the information 36 CONDO MEDIA • AUGUST 2009

Table of Contents for the Digital Edition of Condo Media - August 2009

Condo Media - August 2009
From the CED’s Desk
Editorial Board
CAI New England Chapter Partners
CAI News
CAI Regional News
Asked & Answered
Homeowner’s Corner
Cover Story: Call to Order
Vendor Spotlight
Classified Service Directory
Advertisers Index

Condo Media - August 2009