What is the name of your state (only U.S. law)? Texas
I have a question about this clause in the multistate Condominium Rider that is used by most banks. I'm in condo in Houston, Texas. The HOA has a property manager, but we want to go to self-management and hire only a book keeping service. This is due to the current management company's failure to perform it's duty and the size of our HOA being only 30 units.
What concerns me is the section iii below that requires lender consent before "termination of professional management and assumption of self-management of the Owners Association". The way I read it most of the homeowners in our HOA would be exempt since our documents reserve to the Board the hiring/firing of employees. So only the Board has the right to consent to the termination of the management company. But two of three of the Board members have mortgages. Would this provision affect them? The Board president whom I have noted this to refuses to consult her bank for information stating that they have no standing in our HOA affairs. She also doesn't want to incur fees from our HOA attorney to ask about this issue. She seems to think that when we file our documents of self management it would be sufficient notice and nothing more is needed. I'm not a board member but it seems to be wise to check out this issue just the same. Is there any case law or other information on this clause? Do banks usually enforce it? Any information would be appreciated on this.
Lender’s Prior Consent. Borrower shall not, except after notice to Lender and with Lender’s prior written consent, either partition or subdivide the Property or consent to: (i) the abandonment or termination of the Condominium Project, except for abandonment or termination required by law in the case of substantial destruction by fire or other casualty or in the case of a taking by condemnation or eminent domain; (ii) any amendment to any provision of the Constituent Documents if the provision is for the express benefit of Lender; (iii); or (iv) any action which would have the effect of rendering the public liability insurance coverage maintained by the Owners Association unacceptable to Lender.
An example of the full document is here:
mortgage deed of trust document
I have a question about this clause in the multistate Condominium Rider that is used by most banks. I'm in condo in Houston, Texas. The HOA has a property manager, but we want to go to self-management and hire only a book keeping service. This is due to the current management company's failure to perform it's duty and the size of our HOA being only 30 units.
What concerns me is the section iii below that requires lender consent before "termination of professional management and assumption of self-management of the Owners Association". The way I read it most of the homeowners in our HOA would be exempt since our documents reserve to the Board the hiring/firing of employees. So only the Board has the right to consent to the termination of the management company. But two of three of the Board members have mortgages. Would this provision affect them? The Board president whom I have noted this to refuses to consult her bank for information stating that they have no standing in our HOA affairs. She also doesn't want to incur fees from our HOA attorney to ask about this issue. She seems to think that when we file our documents of self management it would be sufficient notice and nothing more is needed. I'm not a board member but it seems to be wise to check out this issue just the same. Is there any case law or other information on this clause? Do banks usually enforce it? Any information would be appreciated on this.
Lender’s Prior Consent. Borrower shall not, except after notice to Lender and with Lender’s prior written consent, either partition or subdivide the Property or consent to: (i) the abandonment or termination of the Condominium Project, except for abandonment or termination required by law in the case of substantial destruction by fire or other casualty or in the case of a taking by condemnation or eminent domain; (ii) any amendment to any provision of the Constituent Documents if the provision is for the express benefit of Lender; (iii); or (iv) any action which would have the effect of rendering the public liability insurance coverage maintained by the Owners Association unacceptable to Lender.
An example of the full document is here:
mortgage deed of trust document