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Why Cant Our Condo Association Get A Mortgage Loan?


A condo association or HOA cannot get a mortgage loan. That's because the legal structure of a condo association is fundamentally different from that of a cooperative, which can get a mortgage loan.

In a cooperative, an apartment corporation owns the entire building and acts as landlord to all of the residents. Each resident receives a certain number of shares in the apartment corporation and a (proprietary) lease that entitles him or her to occupy their apartment. Since the apartment corporation owns all of the real estate, it has something to mortgage.

In a condominium association or HOA, each owners receives title to an individual unit, as well as to an undivided, pro rata ownership interest in the common elements of the condominium association (the lobby, basement areas, grounds, etc.). Since each person owns a piece of the real estate, each has something to mortgage, and many condo-apartment owners do just that.

Condo associations and HOA can get a special type of loan that uses the right to assess owners as loan security or collateral.  Learn more about HOA loans.

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