Lender Questionnaires and Paid Assessment Letters

Many states have distinct disclosure laws that obligate sellers to inform prospective purchasers about the home or unit they are buying within a condominium, homeowner’s association or townhome association.

These disclosures can include a variety of information and paperwork that outline the association’s leasing restrictions, rules, regulations, and other owner obligations.

For example:

  • In Illinois, Section 22.1(a) of the Illinois Condominium Property Act describes the information that the unit owner must obtain from the board for inspection by a prospective purchaser, upon demand, in the event of any resale of a condominium unit by a unit owner other than the developer.
  • Florida Statute 720.401 requires homeowner associations (HOA) to disclose a number of community membership requirements before the sale is executed.
  • Under Wisconsin Statutes Section 703.33, the association is required to provide an executive summary “setting forth in clear plain language” information addressing several community issues including parking, special amenities, and the rental of units.

Along with state mandated disclosures, lender questionnaires and paid assessment letters can also be a part of a real estate sale or refinance within a community association.

Lender Questionnaires

In order to meet borrowing eligibility requirements, some lenders will require potential buyers to obtain a questionnaire covering information beyond state-mandated disclosures.

Below are some of the questions that are often included in a lender-specific questionnaire:

  • If the community association is professional managed, what is the management company’s tax ID?
  • In the event a lender acquires a unit due to foreclosure or a deed-in-lieu of foreclosure, is the mortgagee responsible for paying delinquent common expense assessments?
  • What is the total square footage of commercial space in the building that is separate from the residential association?
  • How many unit owners are 60 or more days delinquent on assessments?

These questions are asked because lenders are performing their due diligence to identify any potential red flags and risks that could impact their loan underwriting procedures.

For example, the lender may not approve financing for a home or unit sale or refinance if the association:

  • Does not have adequate reserve funds
  • Is in the middle of a lawsuit or is pending litigation
  • Has a certain percentage of owners with delinquent assessments

Paid Assessment Letter

A paid assessment letter (PAL) is also known as an estoppel letter, or certificate of assessments.

The letter can be required in the sale or refinance of a home or unit within an association. For example, a paid assessment letter is required in Illinois pursuant to Chapter 765, Section 605/22.1 of the Illinois Condominium Property Act.

The paid assessment letter can include:

  • The property’s address
  • The buyer’s name and contact information
  • The seller’s name and contact information
  • The closing date
  • The amount of the assessment
  • The frequency of the assessment (ex. monthly, annual)
  • Paid assessments through a given date
  • Unpaid assessments, association fees, and/or violation fines
  • When the last assessment or fee payment was made
  • If there are any outstanding liens for the home or unit
  • If there are any unpaid special assessments

Recent Federal Requirements

The Federal National Mortgage Association (FNMA, otherwise known as Fannie Mae) established new regulations effective in 2022.

These regulations require certain types of community associations to provide extensive information associated with the condition of its building(s) in order to obtain a loan insured by FNMA.

These regulations will specifically impact an association when an owner sells or seeks to refinance their unit. Upon sale or refinance, the association may need to provide a Seller Disclosure document providing additional information regarding the association’s:

  • Long-term financial condition
  • Structural integrity
  • Deferred maintenance information
  • Building code issues

Projects with unsafe conditions and/or significant deferred maintenance may be considered ineligible. Additionally, special assessments will be reviewed more stringently.

Documentation of any pertinent paperwork must be carefully maintained should an appraiser or lender submit a request.


Lender specific questionnaires and paid assessment letters protect the buyer, seller, and the association. They can also involve the input of a property manager, financial consultants, and legal counsel.

If you’re buying or selling a home that’s part of a community association, click here to contact Circle Closings.

Our attorneys can walk you through the real estate closing process, pay attention to the details, and protect your interests during this important transaction.