Mortgagee Rights

Article XIII of the Declaration grants specific rights to holders, insurers, and guarantors of first mortgages on Lots. An "Eligible Holder" is an institutional holder/insurer/guarantor of a first mortgage that has provided the Association with a written request for notices stating its name, address, and the applicable Lot (Source: Declaration Article XIII § 1).

Notices to Eligible Holders

Eligible Holders are entitled to timely written notice of:

• Any proposed termination of the Association.
• Any condemnation loss or casualty loss affecting a material portion of the Common Properties or any Lot encumbered by the Eligible Holder's first mortgage.
• Any delinquency in payment of assessments by an Owner of a mortgaged Lot that has continued for 60 days.
• Any lapse, cancellation, or material modification of any Association insurance policy or fidelity bond.
• Any proposed action requiring Eligible Holder consent under Sections 2 and 3 of Article XIII.

(Source: Declaration Article XIII § 1.)

The Board is also required to notify any first mortgagee of any Lot of any default in the Declaration's terms by the Lot Owner that is not cured within 60 days (Source: Declaration Article IV § 8.C).

Consent Thresholds

• Restoration/repair after partial condemnation or insured damage that departs from the Declaration and original plans: requires approval of Eligible Holders of first mortgages on 51% of mortgaged Lots (Source: Article XIII § 2.A).
• Termination of the Association after substantial destruction or condemnation: approval of Eligible Holders representing at least 51% of votes of mortgaged Lots (Source: Article XIII § 2.B).
• Termination of the Association (general): prior written consent of the City, plus consent of at least 75% of Class A votes (and the Declarant while it still owns Lots), plus approval of Eligible Holders of first mortgages on 75% of mortgaged Lots (Source: Article XIII § 3.A).
• Material amendments to the Declaration, Bylaws, or Articles touching enumerated topics (voting; assessments/liens; reserves; insurance/fidelity bonds; Common Properties use/maintenance/configuration; Lot boundaries; leasing; rights of first refusal; provisions for Eligible Holders): consent of ≥75% of Class A votes (and Declarant if still an Owner) plus Eligible Holders of 51% of mortgaged Lots (Source: Article XIII § 3.B). City consent additionally required for matters affecting Tracts A and B reserves, use, maintenance, configuration (Source: Article XIII § 3.B last paragraph).

Special FHLMC Provision

So long as required by Freddie Mac, two-thirds (2/3) of Eligible Holders or Owners must consent before the Association may (a) abandon/partition/subdivide/sell/transfer the Common Properties; (b) change the method of determining obligations, assessments, dues, or other charges; (c) change/waive/abandon any scheme of architectural design/exterior appearance regulations or their enforcement; (d) use hazard insurance proceeds for any Common Properties losses other than repair, replacement, or reconstruction of those properties (Source: Declaration Article XIII § 4).

First mortgagees may, jointly or singly, pay taxes or other charges in default and are entitled to immediate reimbursement from the Association (Source: Article XIII § 4).

Assessment Lien vs. First Mortgage

The Association's assessment lien is subordinate to a first mortgage or deed of trust. Foreclosure of a senior mortgage (including non-judicial sale under a deed of trust) extinguishes the assessment lien for amounts that became liens before the foreclosure; assessments thereafter remain Lot obligations (Source: Declaration Article IV § 9).

Sources

• source/2025.07.07_summitridge townhomes_amended and restated declaration.md — Articles IV § 8–9, XIII