Condo Association Management Blog

You say this: "... specialty HOA LOANS or Condo Association Loans which ARE SECURED BY AN ASSIGNMENT OF THE CONDO ASSOCIATION ASSESSMENT RIGHTS. Construction loans traditionally use the property asset as collateral or control of the condo association's cash. ... HOA LOANS also apply to Condo Associations, Homeowner Associations, Community Association, Co-Ops and Timeshares and ARE A GREAT ALTERNATIVE TO A SPECIAL ASSESSMENT TO ASSOCIATION MEMBERS.  
 
 
 
Isn’t this a CONTRADICTION? If the SPECIAL ASSESSMENT for the improvement (to repay the borrowed money) is the COLLATERAL for the bank loan for the improvement, then the SPECIAL ASSESSMENT for the improvement is a PREREQUISITE to the bank loan for the improvement, NOT an ALTERNATIVE to the bank loan for the improvement. A SPECIAL ASSESSMENT is a CHARGE, NOT a PAYMENT. If there is no charge (a Special Assessment), then there can be no payment, in which case there can be no repayment of a bank loan, in which case money cannot be borrowed.  
 
 
 

its just saying that rather than a huge crippling special assessment, a loan will allow a condo association to make payments back over time to be less burdensome to condo owners. The condo association can pay it back via increases condo fees, drawing down on condo reserves or maybe partial assessment to pay down a chunk of principal

An assessment is not a payment, but a charge for an expense and the amount of the charge, and a Special Assessment is not a payment or a collection of a payment or method of collecting a payment, but a charge for any expense other than the expense of the annual budget, the annual charge for the expense of the annual budget being the Regular Assessment. If there is no Special Assessment (charge) for the expense of an improvement, then there can be no payment for the improvement, in which case money cannot be borrowed for the improvement, because there can be no payment to repay the borrowed money. So a Special Assessment (a charge) for the expense of an improvement is NOT an ALTERNATIVE to borrowing money for the improvement, but the BASIS/PREREQUISITE for borrowing the money for the improvement. The payment of a Special Assessment (a charge) for the expense of an improvement, regardless of whether the payment pays for the improvement directly or whether the payment repays the money that was borrowed for the improvement, can be collected in whatever manner the Board decides, either as a single payment or in installments, and either in the payment for the annual budget or apart from the payment for the annual budget. If the payment of a Special Assessment (a charge) for the expense of an improvement is collected in installments, then the installments can be made as small as the Board chooses and the number of payments can be stretched out as far as the Board chooses. The payment of a Special Assessment (a charge) for the expense of an improvement can be paid in installments spanning 100 years, if the Board chooses to collect it that way. A payment is the RESULT of an assessment (a charge and the amount of the charge). When the Board "makes" and "collects" an "assessment" against Members, it does not make a payment against Members, but it makes (imposes) a charge for an expense against Members, and it then collects the amount of the charge. The definition of an "assessment" as a "charge," not a payment, is usually stated in the first section of the Declaration of the Association, where "definitions" are established.

Our board has just taken out a huge loan doing just that (using an increased regular assessment). Do you have any legal authorities to back up your stated opinion?

George: 
 
 
 
Our board has just TAKEN OUT A HUGE LOAN doing just that (USING AN INCREASED REGULAR ASSESSMENT). Do you have any LEGAL AUTHORITIES TO BACK UP YOUR STATED OPINION? 
 
 
 
 
 
Jim: 
 
 
 
Are you speaking to me (Jim), or to the author of the original blog entry? If you are speaking to me, then to what “stated opinion” are you referring?  
 

Jim, I think, Whom ever wrote:  
 
 
 
 
 
"then the SPECIAL ASSESSMENT for the improvement is a PREREQUISITE to the bank loan for the improvement, NOT an ALTERNATIVE to the bank loan for the improvement. A SPECIAL ASSESSMENT is a CHARGE, NOT a PAYMENT. If there is no charge (a Special Assessment), then there can be no payment, in which case there can be no repayment of a bank loan, in which case money cannot be borrowed.  
 

Hi George, 
 
 
 
In asking, "Do you have any legal authorities to back up your stated opinion?" are you asking where I get the idea that an assessment is a charge, not a payment, and that the Regular Assessment is the annual charge for the expense of the annual budget, not the payment for the annual budget, and that a Special Assessment is any charge for any other expense (such as the expense of an improvement of the membership's Common Property), not a payment which is collected apart from the payment for the annual budget? Is that what you're asking? 
 
 
 
Jim