I am the vice president of a community association of 55 homes in Loudoun County. Our homeowners recently approved changes to our legal documents, but they have a clause that states: “Any other provision of this Declaration to the contrary notwithstanding, neither the Members, the Board of Directors, nor the Association shall, by act or omission, take any of the following actions without the prior written consent and approval of the institutional holders of all First Mortgages of record on the Lots . . . [including] Modify or amend any material or substantive provision of this Declaration or the Bylaws of the Association.”
This provision appears to be a show-stopper for several reasons. The board of directors does not have a list of all lenders, there are a couple of foreclosed properties for which which we have no information, and there are a few residents who will not provide any personal information, including the name of their lender. Is there a public source where we can get lender data, or can you suggest other ways to overcome this problem?
It may not be a consolation to you, but this is not unique to your association. Almost every community association (including condominiums and homeowner associations) has similar language in its legal documents.
Even without lender approval, amending your legal documents requires a supermajority vote of the owners, based on their percentage ownership in the association. When legislatures enacted association laws, they did not want a small minority of owners to be able to dramatically change the way the association is governed and controlled.
The Virginia Condominium Act, for example, requires that a minimum of two-thirds of the unit owners (by their percentage of ownership) approve any amendments to the legal documents. The D.C. Condominium Act contains a similar requirement. And although Maryland does not have any such requirement, from my experience most, if not all, Maryland association legal documents contain similar supermajority requirements, demanding two-thirds or even 75 percent approval.
The problem is compounded because most association documents, in order to comply with Fannie Mae and Freddie Mac guidelines, contain requirements such as those in your legal documents. In fact, Virginia law states that “no provision of this chapter shall be construed in derogation of any requirement of the condominium instruments that all or a specified number of the beneficiaries of mortgages or deeds of trust encumbering the condominium units approve specified actions contemplated by the unit owner’s association.”
You say you are having difficulty obtaining the names of the current mortgage holders. Your board should enact a rule requiring all homeowners to provide, on an annual basis, the name of their mortgage lender. This is not a difficult task, nor is it an invasion of privacy. All mortgages (deeds of trust) are public information since they are recorded among the land records in the jurisdiction where your property is located. And many jurisdictions have online access to the local recorder of deeds. For example, you should be able to find out who holds the mortgage loans on all of your properties by searching the Web for “Loudoun County real estate tax.”