When a Condominium requires repairs or even routine maintenance, ideally the Association will have reserve funds that have been collected over a number of years that can be used to fund those repairs and maintenance. However, sometimes projects come along that exceed collected reserves, or include items for which reserves were never maintained. In these situations, the Association needs funds to complete necessary repairs and maintenance. Below we discuss the various methods of obtaining the funds needed when they are not otherwise readily available.
Financing Through Assessments
One option for funding necessary maintenance and repair projects is to levy a Special Assessment. Special Assessments are typically levied by a vote of the Board of Directors. However, your Governing Documents may require an Owner vote to approve a Special Assessment. Special Assessments place a rather immediate financial burden upon the membership, as they generally need to be levied and collected over a relatively short period of time to ensure that the Association has the funds in hand to pay vendors as projects proceed through to completion.
Financing Projects by Obtaining a Loan
Another, and perhaps more feasible and less burdensome option for funding necessary maintenance and repair projects is to obtain a loan. Generally, the decision to borrow funds to finance an Association project rests with the Association’s Board of Directors. 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.
Borrowing funds for necessary maintenance and repair projects is less burdensome on owners and the Association alike, as it allows immediate access to the funds needed and generally allows repayment over a longer period of time than what is typically available for a Special Assessment.
Thinking that a loan may be right for your Association? 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.
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.
Find the Right Financing with CondoHOALoans
Through Katzman Chandler’s CondoHOALoans program, we are dedicated to assisting your Community and its Board of Directors with finding the funding you need to make necessary repairs – even if your Community does not qualify for conventional financing.
Don’t go it alone. Contact us today and let’s discuss how our CondoHOALoans program can help your Community.