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Regardless of whether your Association is a Condo, a Cooperative, or an HOA, one thing is certain… your community will require maintenance, repairs, and even improvements, throughout the years.   

When the need for maintenance, repairs and/or improvements arises, many Associations may find themselves in a situation in which they lack adequate funds to pay for these items.  When funds are needed for Association projects, obtaining a loan is often the most feasible option.

In this article, we will address and answer some of the most common questions that Condo Associations and HOAs have about Association loans, including how loans work, the process for obtaining them, and how loans are paid back. Let’s dive in and take a closer look at loans for Condo Associations and HOAs

Association Loans

  • Who decides if a Condo Association or HOA should seek financing for a project?   Generally, the decision to borrow funds to finance an Association project rests with the Association’s Board of Directors.
  • Can a Condo Association or HOA get a loan? – Yes!  Both Condos and HOAs can borrow funds.  However, some Association documents may require a vote of the owners to obtain loans of certain dollar amounts or for certain projects.  If the Association’s documents do not contain a restriction on borrowing funds, then borrowing is generally authorized by Florida Statutes Chapter 617, governing not-for-profit corporations.
  • How do Condos and HOAs get loans? – Now that you know that Condos and HOAs can obtain loans, here’s how to get started. Condos and HOAs obtain loans by applying to conventional or private lenders.  The application process and information required to complete that process will include a description of the project, the estimated amounts of money sought, and financial documents and reports from the Association.  

Types of Loans for Condo Associations and HOAs

What different types of loan options are there for Condo Associations and HOAs?  Depending upon the type of project, Association Loans may include: 

  • Lines of credit;
  • Term loans; or
  • A combination thereof, such as a Line of Credit that converts to a Term Loan  

In addition to Loans to fund specific projects, Association Loans may be sought and obtained to provide working cash flow, and even to jumpstart or increase Association reserves.

Whether to get a Loan

Why should my Association consider a loan?   Whether your Association needs a new roof, is short on cash flow due to current projects or owner delinquencies, or is interested in establishing/funding reserve accounts, a loan may assist your Association’s owners by easing the financial burden that typically accompanies funding these items through Special Assessments.

Is funding projects through Special Assessment an option?  Project funding through Special Assessment is an option, but is not the best option.  Special Assessments not only place a burden on the Association’s Members by requiring payments over a relatively short period of time, but also place a burden on the Association in that the Association will not have access to the total amount of the Special Assessment, unless and until all installments are paid by the Owners.

For example, if an Association project will take six months to complete, and will cost $500,000.00, the Association would need to levy a Special Assessment with an installment schedule that allows sufficient funds to be collected in advance of when payments are due to the vendor.  So, a Special Assessment in this scenario may need to be levied to be paid over a period of three (3) months or less.  In addition, the Special Assessment will need to include additional funds to cover any anticipated delinquency in the event that some owners do not pay the Special Assessment in a timely manner.

In the alternative, if the Association obtains a loan to fund the same $500,000.00 project, it will have all of the funds needed for the project available, so that the project can move forward.  If the loan is structured as a 12 month Line of Credit that converts to a three (3) year term loan, then during the initial 12 months, as the Association draws funds from the Loan, the Association may pay interest only, and once the Line of Credit converts to a Term Loan, the Association would be responsible for payments of interest and principal for three years.  This means that owners will be permitted to repay their proportionate share of the loan amount over a three-year term.  Thus, lessening the financial burden on the Owners, and still meeting the obligations of the Association. By lessening the financial burden on the members by extending repayment over a longer period of time, it is anticipated that owner delinquency percentages will be significantly decreased.

Lending Requirements

What is the loan process?  An Association will typically apply for the loan and provide all required documents, such as financial reports, copies of tax returns and bank statements. Other documents may be requested, depending upon the Association and the type of loan sought.

Does the Association have to provide financial statements?  Both condos and HOAs need to provide financial statements as part of the loan application process.

How do lenders evaluate financial statements?  This depends upon the particular lender’s underwriting criteria. 

The Association was approved for the loan – now what?

Once approved, loan documents are issued, which will require review by the Association’s legal counsel.  Thereafter, a loan closing is scheduled, and the loan is funded.  Depending upon the type of loan, the Association may either draw funds against a Line of Credit, or the full amount borrowed may be made immediately available.  

Loan Repayment

How does a Condo or HOA pay back the loan? Repayment of the loan is generally made through a line item in the Association’s budget, or by a Special Assessment that spans the duration of the loan.

What happens if an Association defaults on a loan?   Depending upon the terms of the loan documents, the lender will typically issue a notice of default and provide the Association with the ability to bring the loan into good standing.  If the default is not corrected, then the lender may exercise any other rights that it has with respect to default, including, but not limited to enforcing its right to collect assessments.


Your journey to the funding you need starts with Katzman Chandler’s CondoHOALoans Program. Let CondoHOALoans assist your Association in obtaining the funds needed for necessary repairs and upgrades to your property. Please visit the CondoHOALoans website, take our FREE, NO OBLIGATION, FINANCIAL HEALTH SURVEY.  There you will discover why we are your trusted legal resource to assist you in identifying competitive lending options that fit the particular needs of your Community Association.  Whether your Community needs funds to complete necessary projects, to overcome a budgetary shortfall, or to jumpstart and build Reserves, the CondoHOALoans Program provided by Katzman Chandler has the answers, legal help, and resources you need!