Q: Are Additional Agreements Recommended for Mortgages of Condominium Properties?
A: Yes. While it is ultimately a matter of bank loan policy, WBA generally recommends that banks consider obtaining additional covenants and agreements from both the mortgagor and the condominium association, such as through a condominium rider.
Condominiums often include common areas and common interests that are shared by parties beyond bank’s mortgagor. In order to protect its security interest in consideration of these additional rights, bank might consider obtaining certain agreements drafted through a condominium rider. Such riders might include agreements on behalf of the condominium association. WBA is aware that, frequently, the condominium association may be unwilling to sign such an agreement. In these cases, bank will need to review the loan and make a determination as to whether it is comfortable proceeding without obtaining such rights.
When obtaining a condominium rider, bank will generally want to obtain the appropriate signatures, and attach the agreements to the mortgage to be filed together. Bank will want to review its forms to determine what agreements may be available. If using FIPCO forms for example, the WBA 428 Condominium Rider has ben drafted for the purposes described above.
If you have any questions on this topic or other matters of compliance, contact WBA’s legal call program at 608-441-1200 or firstname.lastname@example.org.
Birrenkott is WBA assistant director – legal.
Note: The above information is not intended to provide legal advice; rather, it is intended to provide general information about banking issues. Consult your institution’s attorney for special legal advice or assistance.
By, Ally Bates