Articles

Great Reasons to Apply for an HOA Loan or a Condominium Association Loan

In today’s challenging and competitive real estate market, many homeowner associations and condominium associations are forced to choose between updating and modernizing common elements of their properties and keeping the homeowner association or condominium association budget in check. Condominium association unit owners and homeowner association residents are quick to criticize when their common fees are raised, regardless of the reason. But keeping the assets of the homeowner association condominium association looking and performing in top condition is in the best interest of every condominium association unit owner or homeowner association resident. These projects can actually increase the values of the individual units within the condominium association or raise the property values within the homeowner association.

·         When a new roof is needed, condominium associations need to take action, regardless of the level of reserve funds available to handle the project. The same holds true with paved common areas like roads and parking lots within homeowner associations. Neglect of either of these commonly owned assets can lead to litigation and financial disaster for any homeowner or condominium association.

·         Construction defect litigation arises all too often between condominium associations and the builder / developer of the property. While the long-term prospects of collection of funds to repair the defect are often quite good, the upfront costs to sue the developer are often quite high and require funding from the condominium association to proceed. It may be less common in homeowner associations but the principle still holds true. A homeowner association loan or condominium association loan is often the best way to fund construction defect litigation.

·         New lending requirements for mortgage approvals within condominiums may require a community association’s reserve fund to be larger than many are. A condominium association loan is a great fix to this problem as the monies are held in reserve immediately while the unit owners within the condominium association can make smaller contributions to the payback of the condominium association loan over time instead of being forced into providing a large sum of money just to grow the reserve fund. Almost any condominium association with good credit will qualify for this type of condominium association loan.

·         There are times when it is in the best interest of the condominium association to use a condominium association loan to purchase a condominium unit within the association. While there are many reasons a condominium association might want to purchase one of its own units, raising the money to do so presents a challenge. A condominium association loan facilitates the process and makes the purchase possible without tapping into the condominium association’s reserve fund to do so.