*VA Pamphlet 26-7, Revised Chapter 16- Common Interest Communities,*

*Change 3 Condominiums and Planned Unit Development*

## Chapter 16

## Common Interest Communities, Condominiums and Planned Unit Developments

#### Overview

+------------+---------------------------------------------------------+
| #          | > A common interest community is a subdivision          |
| #### What  | > containing common land, often including recreational  |
| is a Commo | > amenities. That common property is typically owned by |
| n Interest | > an association of the homeowners (HOA), to which they |
|  Community | > all must belong and pay lien-supported assessments    |
|            | > for a proportionate share of the expenses of the HOA. |
|            | >                                                       |
|            | > Condominiums and planned unit developments (PUDs) are |
|            | > common interest communities.                          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### B    | > There are VA requirements applicable to **all         |
| asic VA Re | > properties** located in either a PUD or condominium.  |
| quirements | > Also, **condominiums** (but not PUDs) must be         |
|            | > **approved** by VA before any lots or units in the    |
|            | > project are eligible for VA loan guaranty.            |
|            | >                                                       |
|            | > ***References***: See Section 16-A                    |
|            |                                                         |
|            | -   *Requirements Applicable to All Properties in       |
|            |     Common Interest Communities*, and                   |
|            |                                                         |
|            | -   *Condominium Approval Procedures*.                  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > A nationwide list of VA-approved condominiums, the    |
| # VA Appro | > *Condominiums, Planned Unit Developments and          |
| ved Condom | > Builders* list, can be reached via The Appraisal      |
| inium List | > System (TAS).                                         |
|            | >                                                       |
|            | > The internet address is                               |
|            | > [http://condopudbuilder.vba.va.gov]{.underline}.      |
+------------+---------------------------------------------------------+

Continued on next page

July 14, 2003 16-1

*VA Pamphlet 26-7, Revised Chapter 16- Common Interest Communities,*

*Change 3 Condominiums and Planned Unit Development*

Overview, Continued

+------------+---+----------------------------------------------+---------+---+
| #          | > |                                              |         |   |
| #### In Th |   |                                              |         |   |
| is Chapter | T |                                              |         |   |
|            | h |                                              |         |   |
|            | i |                                              |         |   |
|            | s |                                              |         |   |
|            | > |                                              |         |   |
|            |   |                                              |         |   |
|            | c |                                              |         |   |
|            | h |                                              |         |   |
|            | a |                                              |         |   |
|            | p |                                              |         |   |
|            | t |                                              |         |   |
|            | e |                                              |         |   |
|            | r |                                              |         |   |
|            | > |                                              |         |   |
|            |   |                                              |         |   |
|            | c |                                              |         |   |
|            | o |                                              |         |   |
|            | n |                                              |         |   |
|            | t |                                              |         |   |
|            | a |                                              |         |   |
|            | i |                                              |         |   |
|            | n |                                              |         |   |
|            | s |                                              |         |   |
|            | > |                                              |         |   |
|            |   |                                              |         |   |
|            | t |                                              |         |   |
|            | h |                                              |         |   |
|            | e |                                              |         |   |
|            | > |                                              |         |   |
|            |   |                                              |         |   |
|            | f |                                              |         |   |
|            | o |                                              |         |   |
|            | l |                                              |         |   |
|            | l |                                              |         |   |
|            | o |                                              |         |   |
|            | w |                                              |         |   |
|            | i |                                              |         |   |
|            | n |                                              |         |   |
|            | g |                                              |         |   |
|            | > |                                              |         |   |
|            |   |                                              |         |   |
|            | s |                                              |         |   |
|            | e |                                              |         |   |
|            | c |                                              |         |   |
|            | t |                                              |         |   |
|            | i |                                              |         |   |
|            | o |                                              |         |   |
|            | n |                                              |         |   |
|            | s |                                              |         |   |
|            | . |                                              |         |   |
+------------+---+----------------------------------------------+---------+---+
|            |   | Topic                                        | See     |   |
|            |   |                                              | Page    |   |
+------------+---+----------------------------------------------+---------+---+
|            |   | Section A: Requirements for Properties in    | 16-A-1  |   |
|            |   | Common Interest Communities                  |         |   |
+------------+---+----------------------------------------------+---------+---+
|            |   | Section B: Use of Attorney's Opinion         | 16-B-1  |   |
+------------+---+----------------------------------------------+---------+---+

July 14, 2003 16-2

*VA Pamphlet 26-7, Revised Section A: Requirements for Properties in*

*Common Interest Communities*

## Section A

## Requirements for Properties in Common 

## Interest Communities

#### Overview

+------------+---------------------------------------------------------+
| #          | > VA's goal is to help protect the interests of         |
| #### Basic | > veterans and the Government by ensuring that all      |
|  VA Policy | > properties located in a common interest community     |
|            | > meet VA regulatory requirements. Meeting this goal as |
|            | > efficiently and cost effectively as possible serves   |
|            | > the best interests of all program participants        |
|            | > involved.                                             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > This section contains the following topics.           |
| #### In Th |                                                         |
| is Section |                                                         |
+------------+---------------------------------------------------------+

  ---------------------------------------------------------- ------------
  Topic                                                      See Page

  16-A.01 Requirements Applicable to All Properties in       16-A-2
  Common Interest Communities                                

  16-A.02 Condominium Approval Procedures                    16-A-5

  16-A.03 Table of Required Documents                        16-A-9
  ---------------------------------------------------------- ------------

January 1, 2001 16-A-1

*VA Pamphlet 26-7, Revised Section A: Requirements for Properties in*

*Change 1 Common Interest Communities*

#### 16-A.01 Requirements Applicable to All Properties in Common Interest Communities

Introduction While only condominiums must be approved by VA, lots or
units securing VA loans

> in condominiums and other planned unit developments must meet both
> title and lien-related VA regulatory requirements. The lender is
> responsible for ensuring that these requirements are met for each VA
> loan. Although there is no specific VA requirement that lenders
> maintain evidence in the loan file that these requirements are met,
> they may wish to be guided by the advice of their legal counsel in
> this regard.

+------------+---------------------------------------------------------+
| ##         | > The title requirements for every VA loan, whether or  |
| ### Accept | > not the property is located in a common interest      |
| able Title | > communities, are stated in VA regulations             |
|            | >                                                       |
|            | > ([38 CFR 36.4350]{.underline}). These requirements    |
|            | > indicate                                              |
|            |                                                         |
|            | -   the estate must not be less than fee simple, except |
|            |     under certain circumstances ([38 CFR                |
|            |     36.4350(a)]{.underline})                            |
|            |                                                         |
|            | -   title must to be subject to unreasonable            |
|            |     restrictions o use and occupancy, except under      |
|            |     certain circumstances ([38 CFR                      |
|            |     36.4350(b)]{.underline}), and                       |
|            |                                                         |
|            | -   certain minor title limitations will not be         |
|            |     considered by VA, to the extent described, as       |
|            |     materially affecting the value of the property      |
|            |                                                         |
|            | -   ([38 CFR 36.4350 (c)]{.underline}).                 |
|            |                                                         |
|            | > **[\[38 CFR 36.4350\]]{.underline}**                  |
|            | >                                                       |
|            | > **[\[38 CFR 36.4350 (a)\]]{.underline}**              |
|            | >                                                       |
|            | > **[\[38 CFR 36.4350 (b)\]]{.underline}**              |
|            | >                                                       |
|            | > **[\[38 CFR 36.4350 (c)\]]{.underline}**              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > VA regulations require that every VA loan be secured  |
| ### Superi | > by a first lien on the property, except under certain |
| or VA Lien | > circumstances. ([38 CFR 36.4351]{.underline} and [38  |
|            | > CFR 36.4352]{.underline})                             |
|            | >                                                       |
|            | > When a property is located in a condominium or        |
|            | > planned unit development, the lender must ensure that |
|            | > any mandatory homeowner association assessment is     |
|            | > subordinate to the VA-guaranteed mortgage.            |
|            | >                                                       |
|            | > **\[[38 CFR 36.4351]{.underline}\]**                  |
|            | >                                                       |
|            | > **\[[38 CFR 36.4352]{.underline}\]**                  |
+------------+---------------------------------------------------------+

Continued on next page

February 5, 2001 16-A-2

*VA Pamphlet 26-7, Revised Section A: Requirements for Properties in*

*Common Interest Communities*

16-A.01 Requirements Applicable to All Properties in Common Interest
Communities, Continued

+------------+---------------------------------------------------------+
| ###        | > Fee appraisers will use                               |
| ## Apprais |                                                         |
| al Related | -   Freddie Mac Form 70/FannieMae Form 1004, Uniform    |
|            |     Residential Appraisal Report, for properties        |
|            |     located in a planned unit development, or           |
|            |                                                         |
|            | -   Fannie Mae Form 1073, *Individual Condominium Unit  |
|            |     Appraisal Report,* for properties located in a      |
|            |     condominium. .                                      |
|            |                                                         |
|            | > > Requirements specific to properties located in a    |
|            | > > condominium are outlined in [38 CFR                 |
|            | > > 36.4360a]{.underline}, Appraisal Requirements.      |
|            | >                                                       |
|            | > If there are any commercial **or** other              |
|            | > non-residential ownership interests in the            |
|            | > condominium, the appraisal report must include them   |
|            | > and their impact on the value of the residential      |
|            | > units.                                                |
|            | >                                                       |
|            | > In declarant/developer controlled **condominium       |
|            | > conversions**, the appraiser must                     |
|            |                                                         |
|            | -   ascertain the degree to which the converted         |
|            |     structure and unit(s) has been or will be           |
|            |     rehabilitated for condominium use. The structure    |
|            |     may have been, or is proposed to be, remodeled,     |
|            |     renovated, rehabilitated, modernized, or            |
|            |     "cosmetically' refurbished, and                     |
|            |                                                         |
|            | -   provide a description of the type of work completed |
|            |     or proposed to be completed in the conversion being |
|            |     appraised for declarant/developer sales. This       |
|            |     information is not required in spot resales by      |
|            |     sellers other than the declarant/developer.         |
|            |                                                         |
|            | > **\[[38 CFR 36.4360a]{.underline}\]**                 |
+------------+---------------------------------------------------------+

Continued on next page

January 1, 2001 16-A-3

*VA Pamphlet 26-7, Revised Section A: Requirements for Properties in*

*Common Interest Communities*

16-A.01 Requirements Applicable to All Properties in Common Interest
Communities, Continued

+------------+---------------------------------------------------------+
| ##### Not  | > The notice of value for **all** properties in a PUD   |
| ice of Val | > or condominium will be conditioned: "This property is |
| ue-Related | > located in a development with mandatory membership in |
|            | > a homeowners' association. The lender is responsible  |
|            | > for ensuring that title meets VA requirements for     |
|            | > such property and that homeowner association          |
|            | > assessments are subordinate to the VA-guaranteed      |
|            | > mortgage."                                            |
|            | >                                                       |
|            | > In addition, the notice of value for a property in a  |
|            | > **condominium** which has not been approved by VA or  |
|            | > for which VA approval-related requirements remain to  |
|            | > be satisfied, will be conditioned "The lender is      |
|            | > responsible for ensuring that this condominium is     |
|            | > acceptable to VA and that any condominium-related     |
|            | > special conditions or requirements have been met.     |
|            | > There may be additional information in 'Other         |
|            | > Conditions/Requirements', below."                     |
|            | >                                                       |
|            | > ***Reference***: See                                  |
|            |                                                         |
|            | -   "Acceptable Title" and :Superior VA Lien," in this  |
|            |     section;                                            |
|            |                                                         |
|            | -   Section 16-A.02, and                                |
|            |                                                         |
|            | -   Chapter 13, Exhibit 1, "LAPP Lender's Notice of     |
|            |     Value", Items 3 and 4.                              |
|            |                                                         |
|            | > ***Note***: There are other regulatory-related        |
|            | > requirements for a property in a condominium. For     |
|            | > example:                                              |
|            |                                                         |
|            | -   pre-sale requirement per [38 CFR                    |
|            |     36.4360a(c)]{.underline}                            |
|            |                                                         |
|            | -   warranty requirements for the unit and common       |
|            |     elements per                                        |
|            |                                                         |
|            | -   [38 CFR 36.4360a(d)]{.underline}, and               |
|            |                                                         |
|            | -   a wood-destroying insect inspection is required in  |
|            |     low rise and high rise units only when the fee      |
|            |     appraiser observes a potential problem.             |
|            |                                                         |
|            | > **\[[38 CFR 36.4350]{.underline}\]**                  |
|            | >                                                       |
|            | > **\[[38 CFR 36.4352]{.underline}\]**                  |
|            | >                                                       |
|            | > **\[[38 CFR 36.4360a(c)]{.underline}\]**              |
|            | >                                                       |
|            | > **\[[38 CFR 36.4360a(d)]{.underline}\]**              |
+------------+---------------------------------------------------------+

January 1, 2001 16-A-4

*VA Pamphlet 26-7, Revised Section A: Requirements for Properties in*

*Common Interest Communities*

#### 16-A.02 Condominium Approval Procedures

+------------+---------------------------------------------------------+
| ##### Req  | > For condominium projects, the lender/sponsor must     |
| uest for V | > provide the following to the VA Office of             |
| A Approval | > Jurisdiction:                                         |
|            |                                                         |
|            | -   a written request for VA-approval, and              |
|            |                                                         |
|            | -   a copy of the condominium's organizational          |
|            |     documents.                                          |
|            |                                                         |
|            | > ***Note***: These documents must be reviewed for      |
|            | > compliance with VA regulations, and approved by VA    |
|            | > before any lots or units in the project are eligible  |
|            | > for VA loan guaranty.                                 |
|            | >                                                       |
|            | > ***Reference***: See Section 16-A.03.                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### VA P | > VA will                                               |
| rocessing  |                                                         |
| of Approva | -   review the condominium's organizational documents   |
| l Requests |     for compliance with VA regulations, and             |
|            |                                                         |
|            | -   notify the requesting lender/sponsor.               |
|            |                                                         |
|            | > ***Note***: The condominium must be approved by VA    |
|            | > before any lots or units in the project are eligible  |
|            | > for VA loan guaranty.                                 |
+------------+---------------------------------------------------------+

Continued on next page

January 1, 2001 16-A-5

*VA Pamphlet 26-7, Revised Section A: Requirements for Properties in*

*Common Interest Communities*

16-A.02 Condominium Approval Procedures, Continued

+------------+---------------------------------------------------------+
| ###        | > ***HUD/USDA Approval***                               |
| ## How to  | >                                                       |
| Expedite V | > Generally, projects already approved by the           |
| A Approval | > Department of Housing and Urban Development (HUD) or  |
|            | > the United States Department of Agriculture (USDA) do |
|            | > not need further VA review. Upon receipt of evidence  |
|            | > of HUD/USDA approval, such as a copy of the HUD/USDA  |
|            | > approved project list or the project approval letter, |
|            | > the VA office of jurisdiction adds the project to the |
|            | > nationwide VA list without issuing a formal VA        |
|            | > approval letter.                                      |
|            | >                                                       |
|            | > In rare cases, HUD or USDA may approve a project that |
|            | > VA discovers does not comply with VA regulations. In  |
|            | > those cases, VA notifies the lender as soon as        |
|            | > practicable that it will not guarantee loans in the   |
|            | > project.                                              |
|            | >                                                       |
|            | > ***Use of Attorney's Opinion***                       |
|            | >                                                       |
|            | > This is a highly recommended options for condominiums |
|            | > that have not been approved by HUD or USDA.           |
|            | >                                                       |
|            | > ***Reference***: See Section 16-B.                    |
|            | >                                                       |
|            | > ***Use of Previously Approved Documents***            |
|            | >                                                       |
|            | > When the organizational documents being submitted are |
|            | > essentially the same as a set previously approved by  |
|            | > VA, the lender/sponsor should include a certification |
|            | > from the declarant or declarant's attorney which      |
|            |                                                         |
|            | -   states the fact                                     |
|            |                                                         |
|            | -   specifically identifies the previous set, and       |
|            |                                                         |
|            | -   describes any variation to the previous set.        |
|            |                                                         |
|            | > ***State Agency Certification of a Condominium***     |
|            | >                                                       |
|            | > If a state agency certifies that the condominium has  |
|            | > been created in compliance with the laws of the state |
|            | > in which it is located, include the certification.    |
+------------+---------------------------------------------------------+

Continued on next page

January 1, 2001 16-A-6

*VA Pamphlet 26-7, Revised Section A: Requirements for Properties in*

*Common Interest Communities*

16-A.02 Condominium Approval Procedures, Continued

+------------+---------------------------------------------------------+
| ##### V    | > After completing its review of the material submitted |
| A Decision | > with the request for project approval, the VA office  |
|            | > of jurisdiction sends a written notice of its         |
|            | > decision to the lender/sponsor.                       |
+------------+---------------------------------------------------------+

+--------------------------+-------------------------------------------+
| When ...                 | Then the notice will ...                  |
+--------------------------+-------------------------------------------+
| the project is approved  | indicate any special                      |
|                          | conditions/requirements which must be met |
|                          | prior to VA guaranty of an individual     |
|                          | loan in the project, such as              |
|                          |                                           |
|                          | -   recording of documents                |
|                          |                                           |
|                          | -   pre-sale requirement, or              |
|                          |                                           |
|                          | -   completing of common areas.           |
|                          |                                           |
|                          | > ***Note***: There is no formal VA       |
|                          | > approval letter for projects accepted   |
|                          | > by VA based on their approval by HUD or |
|                          | > USDA.                                   |
+--------------------------+-------------------------------------------+
| there were               | > explain what further documentation is   |
|                          | > needed.                                 |
| -   missing/incomplete   | >                                         |
|     documents            | > ***Note***: VA will then suspend        |
|                          | > processing pending receipt of the       |
| -                        | > needed information or material.         |
|  inaccurate/inconsistent |                                           |
|     information, or      |                                           |
|                          |                                           |
| -   correctable          |                                           |
|     deviations from VA   |                                           |
|     requirements         |                                           |
+--------------------------+-------------------------------------------+
| the project is           | > state the reason.                       |
| unacceptable             | >                                         |
|                          | > ***Note***: When there are              |
|                          | > objectionable provisions related to     |
|                          | > unreasonably retained controls or       |
|                          | > rights of the declarant/developer, and  |
|                          | > it is difficult to amend the documents, |
|                          | > VA may consider a separate recorded     |
|                          | > agreement from the declarant/developer  |
|                          | > relinquishing the objectionable         |
|                          | > provisions.                             |
+--------------------------+-------------------------------------------+

Continued on next page

January 1, 2001 16-A-7

*VA Pamphlet 26-7, Revised Section A: Requirements for Properties in*

*Common Interest Communities*

16-A.02 Condominium Approval Procedures, Continued

+------------+---------------------------------------------------------+
| ##### Do   | > VA recommends that declarants have amendment          |
| cument Ame | > procedures for the declaration or equivalent          |
| ndments Af | > document, amendable by an instrument approved by not  |
| ter Projec | > less than 67 percent of unit owners. The association  |
| t Approval | > must request VA approval of proposed amendments prior |
|            | > to recordation.                                       |
|            | >                                                       |
|            | > VA approval of **any** amendments to the declaration, |
|            | > bylaws, or other enabling documentation is required   |
|            | > while the declarant is in control of the homeowner's  |
|            | > association. A written statement signed by an officer |
|            | > of the Association's Board of Directors and submitted |
|            | > with VA Form 26-1844, is required as evidence of      |
|            | > approval.                                             |
|            | >                                                       |
|            | > Changes made by the declarant prior to the first sale |
|            | > in a condominium project may require amendment of the |
|            | > organizational documents.                             |
|            | >                                                       |
|            | > ***Note***: VA approval is not required for           |
|            | > amendments which annex additional phases to the       |
|            | > condominium in accordance with a development plan     |
|            | > previously accepted by VA.                            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##         | > The condominium documents may specify the following   |
| ### Mortga | > rights for the holders of first mortgages, provided   |
| gee Rights | > the lender makes a written request to the Association |
|            | > for the right, and includes                           |
|            |                                                         |
|            | -   prior approval by first lienholders before the      |
|            |     Association can                                     |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   abandon condominium status or partition or          |
|            |     subdivide a unit or the common elements             |
|            |                                                         |
|            | -   change the percentage interest of unit owners, or   |
|            |                                                         |
|            | -   materially amend the legal documents                |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   timely written notice to first lienholders of       |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   any condemnation or eminent domain proceeding, and  |
|            |                                                         |
|            | -   substantial damage or destruction to the common     |
|            |     elements                                            |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   the right to                                        |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   examine the association books                       |
|            |                                                         |
|            | -   receive annual audited financial statements and     |
|            |     record, and                                         |
|            |                                                         |
|            | -   be given notice of association meetings and be      |
|            |     entitled to a representative at such meetings.      |
+------------+---------------------------------------------------------+

January 1, 2001 16-A-8

Chapter 16- Common Interest Communities, VA Pamphlet 26-7, Revised

Condominiums and Planned Unit Development Change 3

#### 16-A.03 Table of Required Documents

+------------+---------------------------------------------------------+
| ###        | > The table below identifies the documents that the VA  |
| ## Table o | > office of jurisdiction must review in order to        |
| f Required | > approve a particular condominium project.             |
|  Documents | >                                                       |
|            | > ***Reference:*** See Section 16-A.02, Condominium     |
|            | > Approval Procedures                                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > As indicated in the table, some documents are         |
| #### Using | > required only                                         |
|  the Table |                                                         |
|            | -   if applicable                                       |
|            |                                                         |
|            | -   if the declarant is in control of the project, or   |
|            |                                                         |
|            | -   for condominium conversion projects.                |
|            |                                                         |
|            | > The last column indicates whether or not it is        |
|            | > acceptable to submit a draft of the document.         |
|            | > Recorded or existing final documents must be provided |
|            | > if loans have closed in the project.                  |
+------------+---------------------------------------------------------+

  ---------- ---------------------------- ------------- -------------- ----------
  Required                                New Project   Existing       Draft
  Document                                              Resales        

  1          Declaration of Covenants,    Yes           Yes            Yes
             Conditions and Restrictions                               

  2          Bylaws for HOA               Yes           Yes            Yes

  3          Articles of Incorporation    If Applicable If Applicable  Yes
             for HOA                                                   

  4          "Umbrella" projects,         If Applicable If Applicable  Yes
             Declaration, Bylaws and                                   
             Articles of Incorporation,                                
             as above                                                  

  5          Plat, map and/or air lot     Yes           Yes            Yes
             survey of project                                         

  6          Plat, map and/or air lot     If Applicable If Applicable  Yes
             survey of unit(s)                                         

  7          Development plan and         Yes           If Declarant   Yes
             schedule                                   Controls       

  8          Information or Public        Yes           If Declarant   Yes
             Offering Statement                         Controls       

  9          Grant/deed/leasehold         Yes           If Declarant   Yes
             agreement form                             Controls       
  ---------- ---------------------------- ------------- -------------- ----------

Continued on next page

July 14, 2003 16-A-9

Chapter 16- Common Interest Communities, VA Pamphlet 26-7, Revised

Condominiums and Planned Unit Development Change 3

16-A.03 Table of Required Documents, Continued

  -----------------------------------------------------------------------
  Using the Table (continued)

  -----------------------------------------------------------------------

  ---------- ---------------------------- ------------- -------------- ----------
  Required                                New Project   Existing       Draft
  Document                                              Resales        

  10         State reviewing agency's     If Applicable If Applicable  Yes
             report                                                    

  11         Annexation documents         If Applicable If Applicable  Yes

  12         Cross-easement(s)            If Applicable If Applicable  Yes

  13         Facility Leases              If Applicable If Applicable  Yes

  14         Management agreement         If Applicable If Applicable  Yes

  15         Service contract(s) (either  If Applicable If Applicable  Yes
             form of or actual)                                        

  16         HOA budget (existing or      Yes           Yes            No
             proposed)                                                 

  17         Current financial statements If Applicable If Applicable  No
             and reserves of project                                   

  18         Special                      Yes           Yes            No
             assessments/litigation                                    
             statement                                                 

  19         Minutes of last two HOA      Yes           Yes            No
             meetings                                                  

  20         Registered                   If Declarant  If Declarant   No
             architect/engineer statement Controls      Controls       
             on project condition                                      
             (conversions only)                                        
  ---------- ---------------------------- ------------- -------------- ----------

Continued on next page

July 14, 2003 16-A-9

*VA Pamphlet 26-7, Revised Section A: Requirements for Properties in*

*Common Interest Communities*

16-A.03 Table of Required Documents, Continued

+------------+---------------------------------------------------------+
| #####      | > Although the following documents are also required,   |
|  Submit as | > as applicable, they may not be available for          |
|  Available | > submission with the initial package. They must be     |
|            | > submitted as soon as available and before any lots or |
|            | > units in the project can be considered eligible for   |
|            | > VA loan guaranty.                                     |
+------------+---------------------------------------------------------+

  ---------- ---------------------------- ------------- -------------- ----------
  Document                                New Project   Existing       Draft
                                                        Resales        

  21         Recorded documents           Yes           Yes            No

  22         Recorded annexation document Yes           Yes            No
             for subject phase                                         
             (expandable projects only)                                

  23         Evidence recreational        Yes           Yes            No
             facilities completed and                                  
             common area conveyed to HOA                               

  24         Statement on adequacy of     If Declarant  If Declarant   
             utilities serving site       Controls      Controls       
             (conversions only)                                        

  25         Evidence common area title   Yes           If Applicable  No
             free of financial                                         
             encumbrances                                              

  26         Evidence of final local      Yes           No             No
             authority approval and final                              
             VA inspection (Low/High                                   
             Rises and Conversions only)                               

  27         Lender's certification that  Yes           Yes            No
             pre-sale requirement met                                  
  ---------- ---------------------------- ------------- -------------- ----------

January 1, 2001 16-A-11

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

## Section B

## Use of Attorney's Opinion

#### Overview

+------------+---------------------------------------------------------+
| #####      | > Lenders/sponsors seeking VA approval of a condominium |
|  Attorney' | > are encouraged to include an attorney's opinion that  |
| s Opinion  | > the project meets VA requirements, along with the     |
| Encouraged | > organizational documents.                             |
|            | >                                                       |
|            | > This will expedite VA approval of the project by      |
|            | > reducing the extent of VA's review of those           |
|            | > documents.                                            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > The attorney's opinion must                           |
| General Re |                                                         |
| quirements | -   be prepared in letter form on the attorney's firm's |
|            |     letterhead                                          |
|            |                                                         |
|            | -   be signed, dated and show the name and title of the |
|            |     attorney rendering the opinion, and                 |
|            |                                                         |
|            | -   address four areas                                  |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   project identification                              |
|            |                                                         |
|            | -   documents reviewed                                  |
|            |                                                         |
|            | -   attorney's qualifications, and                      |
|            |                                                         |
|            | -   attorney's opinion.                                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > This section contains the following topics            |
| #### In Th |                                                         |
| is Section |                                                         |
+------------+---------------------------------------------------------+

  ---------------------------------------------------------- ------------
  Topic                                                      See Page

  16-B.01 Contents of Opinion                                16-B-2

  16-B.02 What Opinion Must Address                          16-B-4

  16-B.03 Assumptions That Opinion May Include               16-B-7

  16-B.04 Qualifications or Limitations that Opinion May     16-B-10
  Include                                                    

  16-B.05 Exhibit A: Other VA Requirements                   16-B-12

  16-B.06 Exhibit B: Condominium Regulations                 16-B-28
  ---------------------------------------------------------- ------------

January 1, 2001 16-B-1

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

#### 16-B.01 Contents of Opinion

+------------+---------------------------------------------------------+
| ##         | > Identification of the project must include            |
| ### Identi |                                                         |
| fication o | -   the name of project (both legal and marketing, if   |
| f Project  |     applicable)                                         |
|            |                                                         |
|            | -   the location of project (address if available,      |
|            |     city/county, state and zip code)                    |
|            |                                                         |
|            | -   a statement regarding whether or not (if known at   |
|            |     the time of submission) the                         |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   lots in the project are created and subjected to    |
|            |     the Declaration in phases, and                      |
|            |                                                         |
|            | -   approximate number of phases to be developed and    |
|            |     the specific identities of the phases               |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   specific identification of units, and common areas  |
|            |     to be subjected to the Declaration in the first     |
|            |     phase being submitted for acceptance.               |
|            |                                                         |
|            | -                                                       |
|            |                                                         |
|            | -   ***Note***: If the phases have been recorded, the   |
|            |     description must be of those units and common areas |
|            |     legally subjected as of the date of the opinion, or |
|            |     there must be reference to a provided exhibit and   |
|            |     the phase currently being proposed for annexation.  |
|            |                                                         |
|            | -                                                       |
|            |                                                         |
|            | -   information on the status of the master or umbrella |
|            |     association, if any, including                      |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   whether or not the documents are recorded           |
|            |                                                         |
|            | -   a general description of the overall project, and   |
|            |                                                         |
|            | -   the number of sub associations that may be planned. |
+------------+---------------------------------------------------------+

Continued on next page

January 1, 2001 16-B-2

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

16-B.01 Contents of Opinion, Continued

+------------+---------------------------------------------------------+
| > **List   | > The list of documents that are reviewed when          |
| > of       | > developing the attorney's opinion must include, at a  |
| >          | > minimum the                                           |
|  Documents |                                                         |
| >          | -   Declaration, including all exhibits incorporated by |
| Reviewed** |     reference                                           |
|            |                                                         |
|            | -                                                       |
|            |                                                         |
|            | -   ***Example***: Descriptions of subjected lots and   |
|            |     land/lots to be subjected, additional lands,plats   |
|            |     and development plans.                              |
|            |                                                         |
|            | -                                                       |
|            |                                                         |
|            | -   Bylaws for the Association, or similar document     |
|            |     governing the internal operation of the association |
|            |                                                         |
|            | -   Articles of Incorporation for the Association, or   |
|            |     similar document, if not an incorporated entity,    |
|            |                                                         |
|            | -   Public Offering Statement or Information Brochure   |
|            |     for the project, and                                |
|            |                                                         |
|            | -   if applicable, the same documents for any umbrella  |
|            |     or master association in which                      |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   owners in the subject association will be or are    |
|            |     members, or                                         |
|            |                                                         |
|            | -   the sub associations will be or are members.        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > A statement regarding the attorney's qualifications   |
| ## Stateme | > must be similar to the following:                     |
| nt of Qual | >                                                       |
| ifications | > "The undersigned is experienced in the practice of    |
|            | > real estate law in (**name of jurisdiction and        |
|            | > locality in which the project is located**) and is    |
|            | > familiar with the laws, ordinances, regulations, and  |
|            | > other legal requirements that, as of the date of this |
|            | > opinion, were applicable with respect to the          |
|            | > establishment and administration of property owners   |
|            | > associations within that jurisdiction. Consequently,  |
|            | > I am qualified to issue this opinion*.*"              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Actu | > See Section 16-B.02.                                  |
| al Opinion |                                                         |
+------------+---------------------------------------------------------+

January 1, 2001 16-B-3

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

#### 16-B.02 What Opinion Must Address

+------------+---------------------------------------------------------+
| #####      | > The attorney's opinion must address compliance of the |
| Compliance | > organizational documents with VA regulations 38 CFR   |
|  With VA R | > 36.4356 through 36.4360a(g) for condominiums.         |
| egulations | >                                                       |
|            | > ***Reference***: \[**[38 CFR 36.4356]{.underline}**   |
|            | > through **[38 CFR 36.4360a(g)]{.underline}**\]        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > The attorney's opinion must address compliance of the |
| ## Complia | > organizational documents with the technical areas     |
| nce with O | > discussed in Exhibit A.                               |
| ther VA Re |                                                         |
| quirements |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > The actual attorney's opinion must                    |
| Compliance |                                                         |
|  with Loca | -   address compliance of the organizational documents  |
| l/State Re |     with the material requirements of applicable state  |
| quirements |     and local laws, ordinances, regulations and other   |
|            |     legal requirements governing the creation of        |
|            |     property owners associations as of the date of the  |
|            |     opinion, and                                        |
|            |                                                         |
|            | -   identify the above applicable laws, ordinances,     |
|            |     regulations and legal requirements by name and      |
|            |     citation.                                           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > The attorney's opinion must identify any variation    |
| Variations | > from any requirement, including failure to comply     |
|            | > with a specific requirement. A recorded amendment     |
|            | > correcting a document defect or deficiency with       |
|            | > regard to a VA regulation is necessary in most cases, |
|            | > since VA offices do not have the flexibility to       |
|            | > approve such defects or deficiencies.                 |
+------------+---------------------------------------------------------+

Continued on next page

January 1, 2001 16-B-4

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

16-B.02 What Opinion Must Address, Continued

+------------+---------------------------------------------------------+
| #####      | > If there is a master or umbrella association, the     |
| Master or  | > attorney may provide a separate opinion which         |
| Umbrella A | > addresses the compliance with requirements applicable |
| ssociation | > to that form of association.                          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > The attorney's opinion must state whether or not any  |
| # Special  | > of the following conditions are present, and provide  |
| Conditions | > a detailed explanation for any that are to ensure     |
|            | > compliance with VA guidelines and requirements:       |
|            |                                                         |
|            | -   a conversion of a building from a former existing   |
|            |     use such as former rental housing                   |
|            |                                                         |
|            | -   HOA owns a community water and/or sewage disposal   |
|            |     facility                                            |
|            |                                                         |
|            | -   alienation restrictions exist in connection with a  |
|            |     state or local program designed to assist low or    |
|            |     moderate income purchasers, or                      |
|            |                                                         |
|            | -   restrictions exist which are associated with        |
|            |     housing designed for older persons.                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### M    | > If the development is, or will be mixed-use, such as  |
| ixed---Use | > multi-family, commercial or other non-residential     |
|            | > use, the opinion must include                         |
|            |                                                         |
|            | -   a detailed explanation of the arrangements          |
|            |                                                         |
|            | -   the percentage of multi-family or non residential   |
|            |     units/uses, and                                     |
|            |                                                         |
|            | -   an explanation of the voting rights of those units. |
+------------+---------------------------------------------------------+

Continued on next page

January 1, 2001 16-B-5

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

16-B.02 What Opinion Must Address, Continued

+------------+---------------------------------------------------------+
| ##### Op   | > When the attorney's opinion is conditional, that is   |
| inion is C | > based on unrecorded documents, including plats, the   |
| onditional | > recorded documents **must** be submitted to VA prior  |
|            | > to the guaranty of the first VA loan, along with a    |
|            | > certification from the attorney giving the original   |
|            | > opinion. The certification (on the letterhead of the  |
|            | > attorney's firm, signed and dated, giving the         |
|            | > attorney's name and title) must either                |
|            |                                                         |
|            | -   state that the recorded documents are the same as   |
|            |     those on which the original opinion was based, or   |
|            |                                                         |
|            | -   specifically address any change in the recorded     |
|            |     documents and the effect of the change(s) on the    |
|            |     previous opinion.                                   |
+------------+---------------------------------------------------------+

January 1, 2001 16-B-6

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

#### 16-B.03 Assumptions That Opinion May Include

+------------+---------------------------------------------------------+
| #          | > In each instance, at or prior to the execution of     |
| #### Docum | > each document, all blanks appearing therein were      |
| ents are C | > properly completed with the appropriate information,  |
| omplete an | > all signatures and seals were duly made and affixed,  |
| d Accurate | > and all exhibits were properly completed and          |
|            | > attached.                                             |
|            | >                                                       |
|            | > The legal descriptions attached as exhibits to, or    |
|            | > incorporated in, the Declaration accurately and       |
|            | > completely describe the property subjected, or to be  |
|            | > subjected, to the Declaration.                        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Docu | > Each party to the documents had, at all material      |
| ments are  | > times, full and unconditional power, authority,       |
| Authorized | > capacity and legal right to execute and deliver the   |
|            | > documents, and to consummate the transaction          |
|            | > contemplated thereby, without notice to, or the       |
|            | > consent of, any person or entity not a party to the   |
|            | > documents.                                            |
|            | >                                                       |
|            | > The documents were duly and validly authorized,       |
|            | > executed, acknowledged and delivered by the           |
|            | > respective parties. The individuals and entities who  |
|            | > executed each of the documents on behalf of an entity |
|            | > or on behalf of any other person were, at all         |
|            | > material times, duly authorized to do so and, in each |
|            | > instance, were legally competent.                     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### No   | > No provision of any document or any transaction       |
| Violations | > contemplated thereby violates any contract, corporate |
|            | > charter, corporate bylaw, corporate resolution,       |
|            | > partnership agreement, trust agreement, document,     |
|            | > instrument or any other agreement which is or was     |
|            | > binding upon any party to the documents or any        |
|            | > beneficiary thereof. No provision of any document or  |
|            | > any transaction contemplated thereby violates any     |
|            | > judicial or administrative order or decision binding  |
|            | > upon a party to any document or rendered in a matter  |
|            | > in which such party was a party to the proceedings.   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > Each entity (including the declarant) which is a      |
| ## Qualifi | > party to any of the documents or which executed any   |
| ed Parties | > of the documents on behalf of a party was, and at all |
|            | > material times will be, duly organized, effectively   |
|            | > registered, validly existing, in good standing under  |
|            | > the laws of the jurisdiction in which such entity was |
|            | > formed, and qualified to do business in the           |
|            | > jurisdiction in which the project is located.         |
+------------+---------------------------------------------------------+

Continued on next page

January 1, 2001 16-B-7

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

16-B.03 Assumptions That Opinion May Include, Continued

+------------+---------------------------------------------------------+
| #          | > There is no oral or written modification of or        |
| #### No Wa | > amendment to the documents reviewed, and there has    |
| ivers or L | > been no waiver of any of the provisions of the        |
| imitations | > documents, by actions, by conduct of the parties or   |
|            | > otherwise. None of the parties to any of the          |
|            | > documents have entered into or will enter into any    |
|            | > other agreement, or take any other action, which is   |
|            | > inconsistent with, or serves to limit or amend, any   |
|            | > provision of any of the documents.                    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > None of the documents are subject to rescission or    |
| Documents  | > reformation for fraud, duress, lack of consideration, |
| Not Subjec | > mistake, or any other factor affecting its execution. |
| t to Resci |                                                         |
| ssion or R |                                                         |
| eformation |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Re   | > The Declaration (or other recorded covenants) has     |
| cording of | > been, and at all material times shall be duly filed,  |
|  Documents | > indexed, and recorded among the Land Records of the   |
|            | > jurisdiction in which the project is located.         |
|            | >                                                       |
|            | > The Articles of Incorporation (or other governing     |
|            | > documents) have been, and at all material times shall |
|            | > be duly filed, indexed, and recorded with all         |
|            | > applicable state and local governmental agencies.     |
|            | >                                                       |
|            | > In each instance, all applicable recording fees,      |
|            | > charges and taxes have been paid.                     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Au   | > All documents submitted to the attorney as originals  |
| thenticity | > are authentic; all documents submitted to the         |
|            | > attorney as certified or photostatic copies conform   |
|            | > to the original documents; all signatures on all      |
|            | > documents submitted to the attorney for examination   |
|            | > are genuine; and all public records reviewed are      |
|            | > accurate and complete.                                |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Each statement and representation contained in the    |
| # Accuracy | > documents is accurate and contains all statements of  |
|            | > material fact necessary to prevent them, and the      |
|            | > documents generally, from being misleading.           |
+------------+---------------------------------------------------------+

Continued on next page

January 1, 2001 16-B-8

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

16-B.03 Assumptions That Opinion May Include, Continued

+------------+---------------------------------------------------------+
| ###        | > The Articles of *Incorporation* and *Bylaws* (or      |
| ## Correct | > other governing documents) of the association, as     |
|  and Compl | > submitted to the attorney, are true, correct, and     |
| ete Copies | > complete copies thereof, and have not been amended,   |
|            | > modified or canceled and are in full force and effect |
|            | > as of the date of the opinion. Other than the         |
|            | > Articles of *Incorporation*, *Declaration* and        |
|            | > *Bylaws* (or other governing documents) of the        |
|            | > association, there are no other agreements or         |
|            | > documents governing the organization or operation of  |
|            | > the association.                                      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ###        | > The attorney must identify any other assumptions      |
| ## Other A | > included in the opinion. They will be reviewed by VA  |
| ssumptions | > and may be allowed on a case-by-case basis.           |
+------------+---------------------------------------------------------+

January 1, 2001 16-B-9

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

#### 16-B.04 Qualifications or Limitations that Opinion May Include

+------------+---------------------------------------------------------+
| ####       | > No opinion is given regarding compliance with any     |
| # Subjecti | > subjective factual standards contained in these       |
| ve Factual | > requirements.                                         |
|  Standards | >                                                       |
|            | > ***Example***: The attorney is not required to judge  |
|            | > whether specific document provisions are "reasonable" |
|            | > or "equitable".                                       |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > No opinion is given as to whether the project         |
|  Zoning Re | > complies with zoning laws and ordinances, height      |
| quirements | > restrictions, setback requirements, environmental     |
|            | > requirements, or other similar requirements           |
|            | > applicable to the project, or as to the effect of any |
|            | > such requirement on the operation of the project.     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Subd | > No opinion is given as to whether the project         |
| ivision Re | > complies with the applicable subdivision laws or      |
| quirements | > requirements.                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### B    | > No opinion is given as to whether the project         |
| uilding Re | > complies with                                         |
| quirements |                                                         |
|            | -   applicable building code                            |
|            |                                                         |
|            | -   other similar building laws or requirements         |
|            |                                                         |
|            | -   applicable health, or                               |
|            |                                                         |
|            | -   safety laws or requirements.                        |
|            |                                                         |
|            | > No opinion is given as to whether the declarant       |
|            | > obtained any building permits, or approvals or        |
|            | > occupancy certificates, approvals, licenses or        |
|            | > permits with respect to all or any portion the        |
|            | > project, or any expansion or the development thereof, |
|            | > necessary or required as of the date of creation of   |
|            | > the project.                                          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > No opinion is given as to whether the project is      |
|  Operation | > being operated or administered in accordance with the |
|            | > provisions of the governing documents and/or          |
|            | > applicable law.                                       |
+------------+---------------------------------------------------------+

Continued on next page

January 1, 2001 16-B-10

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

16-B.04 Qualifications or Limitations that Opinion May Include,
Continued

+------------+---------------------------------------------------------+
| ##### A    | > No opinion is given as to the applicability or effect |
| pplicabili | > of any laws other than those of the jurisdiction in   |
| ty of Laws | > which the project is located. No opinion is given     |
|            | > with respect to the tax or securities laws of the     |
|            | > jurisdiction in which the project is located (or of   |
|            | > the United States of America).                        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #          | > No opinion is given with respect to title to the      |
| #### Title | > lots, common area or other property subjected, or to  |
|            | > be subjected, to the Declaration, including without   |
|            | > limitation                                            |
|            |                                                         |
|            | -   the ownership of, or legal equitable interests in,  |
|            |     such lots, common area or property                  |
|            |                                                         |
|            | -   the priority of the interests of the respective     |
|            |     owners, vis-à-vis any other rights, titles,         |
|            |     interests or estates in or to such lots, common     |
|            |     area or property, or                                |
|            |                                                         |
|            | -   any encumbrances, liens, covenants, rights-of-way,  |
|            |     restrictions, declarations, or other instruments    |
|            |     which would affect such lots, common area, or       |
|            |     property, or the use thereof.                       |
|            |                                                         |
|            | > The conclusions stated by the attorney are subject in |
|            | > each instance to the operation and effect of any such |
|            | > matters.                                              |
|            | >                                                       |
|            | > The attorney may assume that the declarant has, and   |
|            | > had at all material times, all requisite legal and    |
|            | > equitable title to the property subjected and to be   |
|            | > subjected to the Declaration of record and in fact.   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > No inference is to be drawn beyond the strict scope   |
|  Inference | > of the opinion as expressed by the attorney.          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### Dat  | > The opinion is based upon the status of the           |
| ed Opinion | > documents, and matters pertaining thereto, as of the  |
|            | > date the opinion is given. The attorney assumes no    |
|            | > obligation to supplement the opinion if any           |
|            | > applicable laws change, or if the attorney becomes    |
|            | > aware of any facts that might change the opinion      |
|            | > after the date the opinion is given.                  |
+------------+---------------------------------------------------------+

January 1, 2001 16-B-11

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

#### Exhibit A: Other VA Requirements

\(A\) **[Declaration]{.underline}**

1.  Contains, within its body or incorporated by reference, a legal
    description of the real estate which is currently subject to the
    Declaration.

2.  Contains within its body, or an exhibit incorporated by reference,
    or a supplementary declaration, a description of the common area(s)
    to be legally subjected with the first phase or phases being
    submitted for acceptance.

3.  Contains provisions requiring each unit owner, or in certain
    instances, the subassociation representing such owners (the attorney
    must provide an explanation describing the membership structure and
    rationale for subassociation representation), to be a member of the
    association.

4.  Contains provisions establishing and describing the voting rights of
    each member consistent with the articles of incorporation and as
    follows:

> \(a\) If there are different types of development (i.e., single family
> attached or detached, other residential or commercial uses), the
> voting class structure and basis for voting rights allocating voting
> power among the members must be fully described, including provisions
> allowing for representation or protection of minority interests.
>
> \(b\) The declarant\'s voting rights are not weighted beyond 3 to 1 in
> the declarant\'s favor (based on the total number of units planned).
> The declarant control period does not extend beyond 120 days after the
> date 75 percent of the total number of units planned are conveyed to
> unit owners other than the declarant. (There is also an outside time
> limit on the declarant control period of no later than 7 years from
> the date of recordation of the declaration or, if a phased project, 5
> years after recordation of the most recently recorded annexation
> document.)

5.  Contains provisions for the election (or appointment by declarant
    during the declarant control period), removal and replacement of
    members of the board of directors of the association. These
    provisions may also be placed in the articles of incorporation.

Continued on next page

January 1, 2001 16-B-12

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

Exhibit A: Other VA Requirements, Continued

\(A\) **[Declaration]{.underline}** (continued)

6.  Contains provisions for amendment. Material amendments or
    extraordinary actions must be approved by members entitled to cast
    at least 67 percent of the votes of members present, in person or by
    proxy, and voting at any meeting of the association held in
    accordance with subparagraph d. below, such vote including at least
    a majority of the votes of all members present, in person or by
    proxy, and voting at any meeting of the association other than the
    declarant, or 67 percent of the total authorized votes of all
    members of the association, such vote including the vote of a
    majority of all of the members other than the declarant.
    Notwithstanding the foregoing, the declarant may reserve the right
    to make changes or revisions to comply with the requirements of HUD,
    Fannie Mae, Freddie Mac or VA.

**a**. ***Note 1***: A material amendment includes adding, deleting or
modifying any provision regarding the following:

> \(1\) Assessment basis or assessment liens;
>
> \(2\) Any method of imposing or determining any charges to be levied
> against individual unit owners;
>
> \(3\) Reserves for maintenance, repair or replacement of common area
> improvements;
>
> \(4\) Maintenance obligations;
>
> \(5\) Allocation of rights to use common areas;
>
> \(6\) Any scheme of regulation or enforcement of standards for
> maintenance, architectural design or exterior appearance of
> improvements on units;
>
> \(7\) Reduction of insurance requirements;
>
> \(8\) Restoration or repair of common area improvements;
>
> \(9\) The addition, annexation or withdrawal of land to or from the
>
> project;

Continued on next page

January 1, 2001 16-B-13

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

Exhibit A: Other VA Requirements, Continued

\(A\) **[Declaration]{.underline}** (continued)

> **a**. ***Note 1*** (continued)
>
> \(10\) Voting rights;
>
> \(11\) Restrictions affecting leasing or sale of a unit; or
>
> \(12\) Any provision which is for the express benefit of mortgagees.
>
> **b**. ***Note 2***: An extraordinary action includes:
>
> \(1\) Merging or consolidating the association (other than with
> another non-profit entity formed for purposes similar to the subject
> association);
>
> \(2\) Determining not to require professional management if that
> management has been required by the association documents, a majority
> of eligible mortgagees or a majority vote of the members;
>
> \(3\) Expanding the association to include land not previously
> described as additional land which increases the overall land area of
> the project or number of units by more than 10 percent;
>
> \(4\) Abandoning, partitioning, encumbering, mortgaging, conveying
> selling or otherwise transferring or relocating the boundaries of
> common areas (except for (i) granting easements which are not
> inconsistent with or which do not interfere with the intended common
> area use; (ii) dedicating common area as required by a public
> authority: (iii) limited boundary-line adjustments made in accordance
> with the provisions of the declaration or (iv) transferring common
> area pursuant to a merger or consolidation with a non-profit entity
> formed for purposes similar to the subject association);
>
> \(5\) Using insurance proceeds for purposes other than construction or
> repair of the insured improvements; or
>
> \(6\) Making capital expenditures (other than for repair or
> replacement of existing improvements) during any period of 12
> consecutive months costing more than 20 percent of the annual
> operating budget.)

Continued on next page

January 1, 2001 16-B-14

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

Exhibit A: Other VA Requirements, Continued

\(A\) **[Declaration]{.underline}** (continued)

6\. **Contains provisions for amendment** (continued)

> **c**. Contains the following provisions for meetings of the
> membership to approve a material amendment or extraordinary action:
> (i) at least 25 days advance notice to all members is required (at
> least 7 days notice is required in the case of a meeting for other
> purposes); (ii) the notice states the purpose of the meeting and
> contains a summary of any material amendments or extraordinary actions
> proposed; (iii) the notice contains a copy of the proxy that can be
> cast in lieu of attendance at the meeting; and (iv) if the association
> has, or is planned to have, 250 members or less - the quorum is at
> least 20 percent of the total number of votes; (v) if the association
> has, or is planned to have, more than 250 members but less than 1,000
> members - the quorum is at least 10 percent; and (vi) if the
> association has, or is planned to have, more than 1,000 members,- the
> quorum is at least five percent.
>
> **d**. Provides that any material amendment which changes the rights
> of any specific class of members must also be approved by members
> entitled to cast at least 51 percent of the votes of all members of
> such class present, in person or by proxy, and voting at any meeting
> of the association held in accordance with subparagraph c. above, or
> at least 51 percent of the total authorized votes of all members of
> such class.
>
> **e**. Provides that the following material amendments and
> extraordinary actions must be approved by members entitled to cast at
> least 67 percent of the total authorized votes of all members of the
> association, including at least a majority of the total authorized
> votes entitled to be cast by members other than the declarant:
>
> \(1\) Termination of the declaration or other termination of the
> planned unit development;
>
> \(2\) Dissolution of the association except pursuant to a
> consolidation or merger; and
>
> \(3\) Conveyance of all common areas.
>
> **f**. Provides that during the declarant control period all material
> amendments and extraordinary actions must have the approval of VA, if
> VA has guaranteed any loans secured by units in the project.

Continued on next page

January 1, 2001 16-B-15

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

Exhibit A: Other VA Requirements, Continued

\(A\) **[Declaration]{.underline}** (continued)

6\. **Contains provisions for amendment**, (continued)

> **g**. Provides that all other amendments (other than material
> amendments or extraordinary actions) must be approved by at least a
> majority of the votes entitled to be cast by all members present, in
> person or by proxy, and voting at any meeting of the association at
> which a quorum is present (see subparagraph (4)(b)2 below (Bylaws)),
> or in writing by members entitled to cast at least a majority of the
> total authorized votes of all members of the association.

7.  Grants each owner a non-exclusive easement of use and enjoyment in
    the common areas which is appurtenant to and passes with title to
    each unit. Each owner also has a non-exclusive easement for egress
    and ingress over the common areas, to the extent necessary to
    provide access to the unit and for utilities serving that unit. The
    right of access for necessary ingress and egress to the unit and
    utility services cannot be suspended by the board of directors for
    violations of the covenants or nonpayment of assessments. The
    owner\'s easement rights may be subject to certain limitations
    (other limitations must be separately described by the attorney) as
    follows:

> **a**. Right of the association, acting through the board of
> directors, to mortgage the common areas subject to such member,
> mortgagee and agency approvals as may be provided in the declaration.
> (A lender\'s rights, in the event of default upon any mortgage or deed
> of trust on the common areas, are limited to, after taking possession
> of such common areas, charging reasonable admission and other fees as
> a condition of continued enjoyment by members, and, if necessary, to a
> wider range of users. Upon satisfaction of the mortgage or deed of
> trust, such common areas are returned to the association with full
> restoration of members\' rights);
>
> **b**. Right of the association, acting through the board of directors
> to convey or transfer all or any part of the common areas, subject to
> such member, mortgagee and agency approvals as may be provided in the
> declaration;
>
> **c**. Right of the association, acting through the board of
> directors, without member, mortgagee and agency approvals unless
> provided otherwise in the declaration, to grant easements across the
> common areas for any purpose not inconsistent with the use of those
> areas by members;

Continued on next page

January 1, 2001 16-B-16

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

Exhibit A: Other VA Requirements, Continued

\(A\) **[Declaration]{.underline}** (continued)

7\. **Non-exclusive easement**,(continued)

> **d**. Right of the association, acting through the board of
> directors, without member, mortgagee and agency approvals unless
> provided otherwise in the declaration, to adopt regulations governing
> the use of common areas and the personal conduct of owners, occupants
> and guests thereon;
>
> **e**. Right of the association, acting through the board of
> directors, without member, mortgagee and agency approvals unless
> otherwise provided in the declaration, to charge reasonable admission
> or other fees for special or extraordinary uses of the common areas;
>
> **f**. Right of the association, acting through the board of
> directors, without member, mortgagee or agency approvals unless
> otherwise provided in the declaration, and consistent with existing
> local jurisdiction's zoning and subdivision ordinances, to transfer
> part of the common areas for the purpose of adjusting lot lines in
> accordance with reasonably stated provisions (i.e., does not reduce
> total open space area below zoning requirements, does not materially
> affect development plan on file with an agency, and all units
> previously adjacent to common areas - remain so located, unless the
> owners of the units approve the boundary line adjustment);
>
> **g**. Right of the board of directors without member, mortgagee or
> agency approvals unless otherwise provided in the declaration, to
> suspend the right of any member, and the rights of such member\'s
> household, tenants, guests and invitees to use recreational facilities
> or other common areas (to the extent that access and utility service
> are not impaired) for a period not to exceed 60 days, unless such
> rights are suspended for failure to pay assessments, in which case
> such rights may be suspended until the assessments are fully paid; or
>
> **h**. Special declarant rights reserved by the declarant, (i) such
> as: right to use portions of the common areas for sales and marketing
> purposes; (ii) reservation of easements across the common areas for
> development purposes; (iii) right to grant, terminate or vacate
> easements across common areas for limited purposes such as
> installation and maintenance of utilities, storm water management or
> provision of services to units.

8.  Contains provisions for maintaining the common areas. If the
    association maintains areas it does not own (such as within a public
    right-of way for landscaping or signage or storm water management),
    the attorney must provide an explanation which describes the
    arrangement and discusses the rationale.

Continued on next page

January 1, 2001 16-B-17

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

Exhibit A: Other VA Requirements, Continued

\(A\) **[Declaration]{.underline}** (continued)

9.  Contains provisions for the adoption of an annual operating budget
    and imposition and collection of assessments to meet the expenses of
    the association. The board of directors has the power on behalf of
    the association to levy both annual and additional assessments.

> **a**. Units of a similar nature, receiving similar services, are
> assessed on a uniform basis except for the reduced assessment
> permitted for unoccupied units owned by the declarant or a builder. If
> a different basis is used which allocates assessment liability among
> unit based on different services provided to the units or the
> different nature of the units, the rationale for that basis must be
> fully explained.
>
> **b**. If the declarant furnishes a multi-year feasibility budget, the
> declarant and/or a builder may pay a reduced annual assessment on
> unoccupied lots only provided that such reduced assessment is not less
> than 25% of the full annual assessment. Alternatively, the declarant
> or builder may pay a one-time assessment equal to 25 percent of the
> applicable annual assessment per lot based upon the first year budget
> at maximum build-out (or 5 years out for projects involving 250 or
> more lots/units). The lots for which the one-time assessment has been
> paid may be exempt from further assessment until the earlier of: (i)
> initial occupancy or (ii) two fiscal years after submission to the
> declaration. If unoccupied units are receiving the benefit of the
> reduced or one-time assessment, the documents provide that the
> declarant, or builder(s) as appropriate, must provide for or pay for
> all maintenance to such units and shall fund all operating budget
> deficits incurred during the declarant control period, including
> reserves based upon expected lives of items for which reserved, but
> not including shortfalls caused by nonpayment of assessments by other
> members or extraordinary expenditures (e.g., expenses caused by
> natural catastrophes or environmental hazards). A unit initially
> occupied or conveyed to a unit owner other than the declarant or a
> builder is fully assessed. The obligation to fund budget deficits is a
> lien against all the land owned by the declarant (or the declarant and
> builders) in the planned unit development.

Continued on next page

January 1, 2001 16-B-18

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

Exhibit A: Other VA Requirements, Continued

\(A\) **[Declaration]{.underline}** (continued)

10. If a maximum annual assessment is stated, the maximum may increase
    automatically by the greater of ten percent or based upon a Consumer
    Price Index, such as the U.S. Department of Urban Price Index - All
    Urban Consumers (1982-84=100) or other comparable index reflecting
    the association's cost increase experience each year. The maximum
    may also be increased by a majority vote of the members obligated to
    pay such assessment or with the written approval of members entitled
    to cast a majority of the total number of authorized votes of
    members obligated to pay such assessment (in both cases excluding
    the declarant during the declarant control period). Increases in
    certain fixed costs for insurance, taxes, recycling or waste
    disposal may be passed through to the members, by permitting an
    automatic increase in the maximum assessment which reflects those
    increases. If no maximum assessment is set forth, a vote of the
    members must be required to approve capital expenditures, other than
    for repair and replacement, during a fiscal year of more than 20
    percent of the budget for common expenses for that fiscal year.

11. Contains provisions for a lien-supported assessment. The assessment
    lien of any assessment levied by the association is subordinate to
    the lien of a first mortgage (Title 38, USC, section 3703(d)(3)).
    Subordination to other security interests or liens is acceptable if
    permitted by applicable law. The sale or transfer of any unit
    pursuant to mortgage foreclosure of a first mortgage or any
    proceeding in lieu thereof extinguishes the lien of such assessments
    as to payments which became due prior to such sale or transfer. No
    sale or transfer relieves such unit from liability for any
    assessments thereafter becoming due or from the lien thereof. (NOTE:
    VA will not recognize any limited priority that common expense
    assessments may have over the first mortgage lien. Mortgage holders
    should be aware that no VA claim payment will be made to holders for
    any payments they may have made to clear prior liens for delinquent
    and unpaid association assessments).

Continued on next page

January 1, 2001 16-B-19

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

Exhibit A: Other VA Requirements, Continued

\(A\) **[Declaration]{.underline}** (continued)

12. Contains provisions for collection of assessments. The interest rate
    permitted to be charged by the association is uniform, reasonable
    and non-usurious. The method of determining the interest rate is set
    forth. A rate not to exceed that charged by the Internal Revenue
    Service on delinquent taxes is considered reasonable. The
    association has the power both to foreclose the association\'s lien
    and to bring a legal action against the member personally obligated
    to pay the assessment. The documents may provide that a successor in
    title is entitled to obtain an association disclosure statement or
    estoppel certificate with respect to common expense assessments, in
    which case an owner\'s personal obligation to pay assessments is
    assumed by successors in title unless the successor in title
    acquired title through foreclosure, or any proceeding in lieu
    thereof, of a first mortgage. (NOTE: Units which will be subject to
    a VA-guaranteed loan will not be subject to delinquent assessments
    in excess of 6 months in any case in which the association has not
    brought enforcement action against the current unit owner.)

13. Contains provisions for enforcement of the association documents. If
    owners are held liable for costs and expenses incurred by the
    association as a result of acts or omissions of such owner or such
    owner's tenants, agents, employees, invitees, guests and household
    members in failing to comply with the association documents or rules
    or regulations of the association, regardless of negligence or
    culpability, then the Public Offering Statement and or Information
    Brochure must describe this matter.

14. Contains provisions requiring appropriate types of insurance. The
    board of directors, on behalf of the association, has the authority
    to and is required to obtain coverages in the areas of property
    damage, liability, and personnel. Owners may be required to maintain
    certain types of insurance coverages and, if the owner fails to
    purchase that insurance, the board may obtain those coverages at the
    owner's expense. All hazard and flood insurance policies which
    include any units, must also have the standard mortgagee clause and
    provide for notice to the mortgagee at least ten days before lapse,
    material modification or cancellation of the policy.

15. Contains provisions for reconstruction of the common areas after
    condemnation or casualty loss.

Continued on next page

January 1, 2001 16-B-20

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

Exhibit A: Other VA Requirements, Continued

\(A\) **[Declaration]{.underline}** (continued)

16. Contains provisions governing parking, if parking is not included
    within each unit. If vehicular parking is on the common areas: (i)
    the association documents must: (a) permanently assign a parking
    space on the common area to each unit; (b) assign a specific parking
    area to a specific group of units or (c) make other provisions
    assuring parking in compliance with local ordinances; or (ii) the
    declarant must provide other evidence of parking in compliance with
    local ordinances.

17. Contains provisions guaranteeing mortgagees (may be limited to
    eligible mortgagees, as defined below) and agencies notice of
    amendments. During the declarant control period: (i) the declarant
    must provide a copy of all amendments to VA; and (ii) the
    association may not make any material amendments or take any
    extraordinary actions as described in subparagraph 6 above without
    the approval of VA. The declaration may provide that certain rights
    and protections (including notice and approval rights) are granted
    to only those mortgagees who have provided notice to the board of
    directors of their interest and requested all rights under the
    association documents "eligible mortgagees." Rights granted to
    eligible mortgagees should include the following:

> **a**. Right to inspect association documents and records on the same
> terms as the members;
>
> **b**. Notice of all material amendments to the association documents;
>
> **c**. Notice of any extraordinary actions of the association;
>
> **d**. Notice of any property loss, condemnation or eminent domain
> proceeding affecting the common areas resulting in losses greater than
> 10 percent of the annual budget or any unit insured by the association
> in which the mortgagee has an interest;
>
> **e**. Notice of any termination, lapse or material modification of an
> insurance policy held by the association;
>
> **f**. Notice of any default by an owner of a unit subject to a
> mortgage held by the eligible mortgagee in paying assessments or
> charges to the association which remains uncured for sixty consecutive
> days;

Continued on next page

January 1, 2001 16-B-21

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

Exhibit A: Other VA Requirements, Continued

\(A\) **[Declaration]{.underline}** (continued)

17\. **Provisions guaranteeing mortgagees** (continued)

> **g**. Notice of any proposal to terminate the declaration or dissolve
> the association at least 30 days before any action is taken;
>
> **h**. Right of a majority of the eligible mortgagees to demand
> professional management; and
>
> **i**. Right of a majority of the eligible mortgagees to demand an
> audit of the association\'s financial records.

18. Contains provisions for party walls, if a townhouse planned
    community. The association documents or law of the jurisdiction must
    provide for the maintenance, repair and reconstruction of party
    walls and allocate the costs among the owners served by a party
    wall.

19. Contains provisions for expansion or annexation in a phased
    development. The declaration must, in addition to submitting at
    least 1 phase to the covenants and restrictions: (i) describe the
    additional land proposed to be submitted in the future in a
    sufficient manner to locate the property; (ii) grant the declarant
    the right to submit the described additional land; (iii) describe
    the method of submitting additional land; [d]{.underline} describe
    the basis of voting rights and assessment obligations of units added
    in relation to the voting rights and assessment obligations of units
    already subject to the declaration or provide that such rights for
    future phases will be the same as for phases already submitted; and
    establish a reasonable time limit for submitting additional land. A
    reasonable time limit will depend on the size of the development,
    but generally annexation made within the later of 7 years after
    recordation of the Declaration or 5 years after the most recent
    recordation of an annexation document is considered reasonable. The
    additional land must be contiguous, adjacent or across a public
    right-of-way. If the additional land is not so located, there must
    be a clear statement of that fact and a discussion of the rationale
    for its potential inclusion. The declaration may reserve the right
    to the declarant to submit a limited amount of undescribed adjacent
    additional land, increasing the total size of the planned community
    by up to 10 percent both in land size and number of additional
    units, or such undescribed additional land may be added by the
    association with a majority vote of the members at a duly held
    meeting at which a quorum is present or the written consent of
    members entitled to cast a majority of the total number of votes, in
    both cases excluding the votes of the declarant during the declarant
    control period.

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20. Contains provisions for termination.

Continued on next page

January 1, 2001 16-B-22

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

Exhibit A: Other VA Requirements, Continued

(**B**) **[Bylaws]{.underline}**

1\. Contains provisions for holding meetings of the board of directors,
including the required quorum.

2\. Contains quorum provisions for holding meetings of the members
(including voting by proxy). If the association has, or is planned to
have, 250 members or less, the quorum is at least 20 percent. If the
association has, or is planned to have, more than 250 members but not
1,000 members, the quorum is at least 10 percent. If the association
has, or is planned to have, more than 1,000 members, the quorum is at
least 5 percent. The quorum is not a quorum of each class except when a
vote of a particular class is required on a specific issue.

3\. Contains provisions for holding a meeting. Membership meetings are
required at least annually after there are members other than the
declarant. Special meetings are required upon the written request of a
percentage of the owners other than the declarant. Members can vote by
proxy and may be allowed to vote by mail if permitted by state law.

4\. Contains provisions granting the board of directors the various
powers necessary to conduct the affairs of the association.

5\. Contains provisions placing on the board of directors the duties
necessary to fulfill the purposes of the association.

6\. Contains provisions for electing, removing and replacing directors
and officers (if not addressed in the articles of incorporation).

7\. Contains provisions governing notices to members. Members are given
advance notice of meetings of members (of no less than seven days unless
for a special meeting to approve an extraordinary action or material
amendment in which case at least 25 days notice is required).

Continued on next page

January 1, 2001 16-B-23

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

Exhibit A: Other VA Requirements, Continued

(**B**) **[Bylaws]{.underline}** (continued)

8\. Contains provisions regarding maintenance and availability of the
association documents and the association records. The association is
required to keep records of: (i) its governing documents (i.e.,
association documents, rules and regulations and design standards); (ii)
its actions (board resolutions, meeting minutes, etc.); and (iii) its
financial condition (receipts and expenditures affecting the finances,
operation and administration of the association, budget, financial
statements, etc.) Notwithstanding the foregoing, the association is not
required to maintain records in excess of three years; unless otherwise
required under applicable law. The association documents and all books
and records kept on behalf of the association are available for
examination and copying by a member or such member\'s authorized agent
during normal business hours and upon reasonable notice to the
association and for a reasonable charge, except for privileged or
confidential information.

9\. Contains provisions for amendment by the members.

(**C**) **[Articles of Incorporation]{.underline}**

1\. Contains a statement of the purposes of the association.

2\. Contains provisions requiring that each owner of a unit in the
development or a subassociation representing owners of such units be a
member of the association.

3\. Contains provisions establishing and describing the voting rights of
each member.

4\. Contains provisions for election (or appointment by the declarant
during the declarant control period), removal and replacement of members
of the board of directors unless provided for in the Bylaws.

5\. Contains provisions for amendment by the members.

6\. Contains provisions for dissolution by the members.

Continued on next page

January 1, 2001 16-B-24

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

Exhibit A: Other VA Requirements, Continued

(**D**) **[Other Considerations]{.underline}**

1\. Information Brochure (Public Offering Statement). There is an
information brochure or public offering statement which provides general
information which is to be provided to home buyers informing them about
the project, the association and the rights and obligations of lot
owners. If part of an umbrella or master association, there is a
discussion of that organization, as appropriate, in the areas noted
below. The following information is provided at a minimum:

> **a**. Organizational structure of the association;
>
> **b**. Membership and voting rights of members and the declarant,
> including a description of the declarant control period;
>
> **c**. The general development plan for the project including
> requirements for expansion, phasing, merger and dissolution, an
> explanation that the total membership of the association may be
> increased, and a disclosure whether or not there will be any
> requirements to build a similar product in additional phases;
>
> **d**. The initial amount of assessments, the assessment lien, and the
> method of enforcement;
>
> **e**. A projected budget for the community of at least 1 year at full
> build-out showing projected future assessments and any declarant
> deficit funding contributions, and a component for reserves and
> replacements, if appropriate. If the project is phased, in excess of
> 200 units, or includes significant common area improvements, there is
> a multi-year feasibility budget with reserve tables;
>
> **f**. Method of changing the assessment;
>
> **g**. Description of types of user fees, if any;
>
> **h**. General description of common areas, including improvements;

Continued on next page

January 1, 2001 16-B-25

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

Exhibit A: Other VA Requirements, Continued

(**D**) **[Other Considerations]{.underline}** (continued)

**(1)** (continued)

> **i**. Services provided by the association;
>
> **j**. Maintenance requirements;
>
> **k**. Architectural controls;
>
> **l**. Declarant's retained rights;
>
> **m**. Minimum requirements for insurance to be purchased by unit
> owners;
>
> **n**. Insurance maintained by the association;
>
> **o**. Availability of parking;
>
> **p**. Owners\' liability for acts of others for violation of
> covenants and damage to common areas;
>
> **q**. Association\'s ability to levy individual assessments; and
>
> **r**. Affiliation of the managing agent to the declarant, if any.

Continued on next page

January 1, 2001 16-B-26

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

Exhibit A: Other VA Requirements, Continued

(**D**) **[Other Considerations]{.underline}** (continued)

2\. Reserved Rights. The declarant, its affiliates, the sponsor of the
project, or other party, has not reserved any of the following rights
(unless such reserved rights have been reviewed by the field office or
VA central office and determined reasonable. In such instances, the
previous case or decision must be specifically referenced):

> **a**. Lease of the common area to the association or accepting leases
> from the association, except in connection with development-related
> offices such as marketing, sales or construction office for the
> project;
>
> **b**. Accepting franchises or licenses from the association for the
> provision of central television antenna service, cable television or
> like services;
>
> **c**. Retaining the right, by virtue of continued association control
> or otherwise, to veto acts of the association, except to the extent
> declarant\'s development rights are affected or to enter into
> management agreements or other contracts which extend beyond the
> declarant control period, unless those contracts are (i) limited to 2
> years or (ii) permit the owner-controlled board to terminate the
> contract; or
>
> **d**. Reserving an unlimited right to amend the covenants or to
> replat lots not owned by the declarant or common areas.

3\. Restrictions on Alienation. The following restrictions are not
present (VA Regulation 36.4350 ([38 CFR 36.4350]{.underline}):

> **a**. Right of first refusal;
>
> **b**. Right of prior approval of either a prospective purchaser or
> tenant;
>
> **c**. Leasing restrictions which amount to unreasonable restrictions
> on use and occupancy of a unit; or
>
> **d**. Any minimum lease term in excess of 1 year.

January 1, 2001 16-B-27

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

#### Exhibit B: Condominium Regulations

+------------+---------------------------------------------------------+
| ###        | To access the information about Condominium             |
| ## Locatio | Regulations, go to                                      |
| n of the R | [http://www.homeloans.va.gov/regs.htm]{.underline}.     |
| egulations |                                                         |
+------------+---------------------------------------------------------+

January 1, 2001 16-B-28

*VA Pamphlet 26-7, Revised Section B: Use of Attorney's Opinion*

Accuracy of Doucmentation, 16-8

Actual Opinion. *See* Section 16-B.02

Applicability of Laws, 16-11

Attorney's Opinion, 16-1

Attorney\'s General Requirements, 16-1

Authenticity, 16-8

Authorized Documents, 16-7

Basic VA Policy, 16-1

Basic VA Requirements. *See* Section 16-A

Building Requirements, 16-10

Common Interest Community Definition, 16-1

Compliance with Local/State Requirements, 16-4

Compliance with Other VA Requirements, 16-4

Compliance With VA Regulations. *See* Exhibit B in this Chapter

Conditional Opinion, 16-6

Condominium Approval Procedures, 16-5

Condominium **not** VA Approved, 16-4

Contents of Opinion, 16-3

Correct and Complete Copies, 16-9

Dated Opinion, 16-11

Document Accuracy, 16-7

Documenting Amendments After Project Approval, 16-8

Documents Subject to Rescission or Reformation, 16-8

Expediting VA Approvals, 16-6

First Mortgages Holders Rights, 16-8

Identification of the Project Requirements, 16-2

Identifying Other Assumptions, 16-9

Identifying Variations, 16-4

Inference, 16-11

Location of the Regulations Internet Address, 16-28

Master or Umbrella Association, 16-5

Mixed---Use Development, 16-5

Mortgagee Rights, 16-8

Notice of Value for all Properties in a PUD or Condominium, 16-4

Operated or Administered Project, 16-10

Other Regulatory Related Requirements, 16-4

Other VA Requirements Exhibit, 16-12

Qualifications or Limitations that Opinion May Include, 16-10

Qualified Parties, 16-7

Recording of Documents, 16-8

Request for VA Approval. *See* Section 16-A.03

Special Conditions, 16-5

State Agency Certification of a Condominium, 16-6

Statement of Qualifications, 16-3

Statement Regarding the Attorney's Qualifications, 16-3

Subdivision Requirements, 16-10

Subjective Factual Standards, 16-10

Submitting Required Documents, 16-11

Superior VA Lien, 16-2

Table of Required Documents, 16-9

Title, 16-11

Title Requirements for Every VA loan, 16-2

Use of Attorney's Opinion. *See* Section 16-B

Use of Previously Approved Documents, 16-6

VA Approval Related Requirements, 16-4

VA Approved Condominium List Internet Address, 16-1

VA Decision, 16-7

VA Process for Approving Requests, 16-5

VA Required Documents, 16-9

Value of the Subject Property, 16-3

Violations, 16-7

Waivers or Limitations, 16-8

Zoning Requirements, 16-10