Specialized loans to community associations, condo associations and HOAs are becoming more popular.
Loans are a great alternative to over-assessing association members, because the association gets the funds up front and the loan can be paid off over time, enabling the HOA or condo association to build in the cost of the loan into future condo fees or sporadic, smaller assessments.
Some example uses for HOA and Condo Assoc. loans include:
- purchasing condo units or new property for common use
- construction defect litigations
- hoa reserve funding
- elevator repairs and replacement
- brick re-pointing
- roof replacements
- new heating and plumbing, air conditions, boilers, windows
- lobby renovations
- parking lot repairs and re-paving
- building or repairing water, sewer and electricty infrastructure
- refinancing of exisiting HOA or condo association debt
- building or repair of common areas including community centers, tennis courts, golf courses, club houses, and other facilities.
Lenders usually work with associations to provide innovative loan structures to just about any situation. Other solutions include an Association Line of Credit which HOA's and Condo Associations can tap at their discretion to increase their cash flow.
Loans Can Offset Unit Foreclosures
HOA loans can help offset lost income by potential foreclosures on units owned by condo association members. An HOA loan can hold over a condo association until the condo unit is resold and condo fees start getting paid again to the condo association. Also, condo associations should look into debt purchasing options.
What Secures an HOA or Condo Association Loan
- Assignment of Association or HOA Common Charges/Assessments. (Please Review the details of this with your counsel.)
- No personal guarantees.
- No liens on individual units.
- If the condo association loan or HOA loan request is to purchase real estate, a mortgage lien may be requested.
- In some circumstances, a pledge of some amount of cash balances may be requested.
Refer to this article for more information on Condo Association and HOA Loans .
Other Related Articles:
- Condominium Insurance: Are You Insured Adequately?
- Condo Maintenance - Who Has Responsibility for What?
- Condominium - A Type Of Ownership
- Top 10 Condo Defects
- A Condo Association Website Can Facilitate Communication
