Section 34.08.270. Rights of secured lenders.

   (a) A financial institution, including a commercial bank, mutual savings bank, savings and loan association, credit union and mortgage company when acting as an ordinary money lender, whether secured or not, and providing financing for a common interest community subject to the provisions of this chapter or to a declarant, unit owner, or purchaser for that person's interest subject to the provisions of this chapter, is not liable under this chapter to a person for an act, omission, warranty, product or structural defect, obligation, breach of contract or other duty arising from common interest community financing.
   (b) For purposes of this section, "acting as an ordinary money lender" means a non-negligent action including, but not limited to, property inspections, review of public offering statements, approval of declarations, plats and construction plans and requiring proof of compliance with laws or codes to protect a lender's security interest or otherwise assure the proper use of or repayment of its loan.  A lender does not act as an ordinary money lender when it is an affiliate of the declarant or possesses a direct equity interest other than an interest foreclosed upon in the promotion, development, and sale of a common interest.
   (c) A declaration may require that all or a specified number or percentage of the lenders who hold security interests encumbering the units approve specified actions of the unit owners or the association as a condition to the effectiveness of the action, but a requirement for approval does not operate to
        (1) deny or delegate control over the general administrative affairs of the association by the unit owners or the executive board;
        (2) prevent the association or the executive board from commencing, intervening in, or settling any litigation or proceeding; or
        (3) prevent an insurance trustee or the association from receiving and distributing insurance proceeds except under AS 34.08.440.

Notes

History

(Sec. 1 ch 95 SLA 1985)