Cohousing-L Mailing List: RE: Resale Policy

[Rob Sandelin (floriferous]

If you create a resale policy, be sure to run it by a representative of
whatever funding source(s) that provide your mortgages . I have heard
stories of banks refusing mortgages to cohousing buyers when the group
creates a policy that is not in the interest of the lenders. We had
something like this happen once when we adopted a membership policy which
required buyers to read the cohousing book, attend three meetings, etc. We
had an attorney review that, and on his recommendation, removed it from our
agreements.  Somehow the banks got a hold of an older copy of the agreements
document and they refused to mortgage a house with those conditions, and we
had to explain and send them a new revised agreements document that had the
offending policy removed. In fact it had to be signed as verified by the
officers of the board and notarized. Sheesh, what a hassle.

At Sharingwood we only have a notification requirement before closing. The
seller has to provide the board with the name of the seller, mortgage and
escrow company 10 days before closing. Failure to do so can nullify the
sale. This is just a heads up to the board to ensure any unpaid assessments
are dealt with, and we can notify the escrow and lender of any such liens.
Although, they have their own processes, and whenever a home has sold here,
the bank asks for a budget and assessment statement, among other things.

If you try to limit the equity on a bank financed house, you might also
violate state law. Might want to check with an attorney about this. States
all have different laws regarding changing the status of a Condo, and by
creating equity limitations you are changing the status. Usually the
mortgages must be notified some amount of time prior to any such decision,
and in some condos the mortgage (bank providing the mortgage) holds the
voting rights on the unit.

I know of a non-cohousing condo association that tried to go Coop, and were
totally shocked to find out that in the fine print of their condo
declarations, that the mortagee held the voting rights to the units, and
they actually held 82% of the votes in that situation, and voted against the
coop, usurping the votes of the actual onsite mortgage holders. Needless to
say, it was an unhappy scene, that was tangled in lawyers and court stuff,
but in the end, the banks prevailed and the association had to pay the legal
fees to boot!

So check your Condo declarations carefully if you change your condo in such
a way that might cause a problem for your lenders.

Rob Sandelin
Sharingwood
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