HOA took out a $100,000 loan using our clubhouse as collateral!
Question:
This question is submitted by Ken K. out of Los Alamos, NM.
Our HOA Board (Incorporated in New Mexico) recently took out a $100,000 loan using our common property clubhouse as collateral. There was no submittal of this action for a homeowner consultation or vote.
It is my understanding from various sources that:
(A) By the New Mexico Condominium Law an HOA cannot go into debt but must use an increased or special homeowner assessment as a means to raise funds. This allows for a confirmation vote by homeowners.
The common property, such as the clubhouse, seems to be proportionally titled as part of the property value of each individual unit. Is this loan effectively a second mortgage on our homeowner units? If the loan defaults, how does the bank collect on the pledged collateral?
In a recent election, homeowners (by roughly a 70% majority) voted to increase the assessment to cover the involved maintenance cost. The HOA Board ignored (negated) this official and properly conducted vote to institute the loan instead.
Thank you for any reply or clarification.
Thoughts?
Answers (4)
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