Recently, we’ve heard from many condominium boards and managers about a noticeable uptick in requests from lenders regarding the Condominium Project Questionnaire Addendum. If your association has received one of these “demands”, you’re not alone—and you’re right to approach it with caution.

What Is the Condominium Project Questionnaire Addendum?

Lenders send these questionnaires to condominium associations to gather information about the community. Their goal is to determine whether the condominium project qualifies for mortgage financing. The new version of this Addendum, which many Arizona associations are now seeing, is a direct response to the tragic collapse of the Champlain Towers in Surfside, Florida. In the wake of that event, media attention and liability concerns prompted Freddie Mac and Fannie Mae to change their lending policies as of January 1, 2022.

Now, lenders want to avoid backing loans for condos with:

  • Significant deferred maintenance or material deficiencies
  • Regulatory directives to repair unsafe conditions

Are Arizona Associations Legally Required to Complete the Addendum?

For Arizona condominiums, the decision to complete and return the Addendum is complex. In our opinion, associations are not legally obligated to fill out this form. Arizona law only requires condo and planned community associations with 50 or more units/lots to provide the disclosure information listed in:

The Dilemma: To Respond or Not to Respond?

While there’s no legal requirement to complete the Addendum, refusing to provide the requested information can have real-world consequences. If an association declines, property sales may be affected, buyers might not secure loans, escrows could fall through, and current owners may struggle to refinance or face higher interest rates. This can lead to frustration and pushback from owners.

On the other hand, fully responding to the Addendum and providing additional information could expose the association (and its management company) to future liability. Associations must be very careful and deliberate in how they answer these questions.

How Should Your Association Proceed?

There’s no one-size-fits-all answer, and unfortunately, no perfect solution. Ultimately, it’s up to each Board to decide how to direct their management company in responding to the Addendum.

If your association needs guidance on specific questions within the Addendum, we’re here to help. Please contact us for assistance at info@mulcahylawfirm.com.