A Homeowner's Association (HOA) or Condo Association is a non profit association that takes care of the common areas of a housing development area. The job of a Homeowner's Association, HOA or condo association is to take care of the upkeep and improvements of a association property and they need the money to conduct repairs and improvements.
While the condo associations do have condo reserves some major improvements or repairs may over tax these condo reserves and end up in depleting all of them.
In case of charging an HOA special assessment on the HOA members for raising this amount may lead to delays and non conformance from all the condo owners and in some cases after getting the approvals the condo association may find it difficult to get the money from the condo owners which may stall the work half way through.
Homeowner's Associations, HOAs and Condo Associations can take out an HOA loan or condo association loan from HOA loan providers and can quickly start work on the pending up gradations or repairs without significantly burdening its condo association members.
The benefits of an HOA Loan or condo association loan for the HOA members or condo owners are that their individual credit worthiness has nothing to do with the HOA loans and condo association loans and condo owners don't have to worry about anything but choosing the right HOA Loan repayment plan. Additionally there are some HOA Loan and Condo association loan friendly banks with divisions specifically dealing with HOAs and condo associations that makes it a tad easier for them to get the HOA loans and condo association loans.
That does not however mean that condo association can get their HOA Loan or condo association loan in a jiffy. Most HOA loan providers require HOAs to go through a rigorous HOA loan application process wherein the banks study their condo reserves, cash flows, delinquency, foreclosures and other financials and in some cases the HOA loan provider may also require the Condo Association to be managed by a Certified Common Interest Development Manager.
Normally the HOA loan providers will provide condo association loans to a Homeowner's Associations and condo associations to carry out improvement to facilities such as pools, saunas, playgrounds etc. or to carry out repair work on sidewalks, roofs, parking spaces etc.
Once the Homeowner's Association, HOA or condo association decides for itself the amounts of the HOA loan or condo association loan they can get the same appraised by a condo association loan provider and then choose from a host of options for HOA loan repayment. Since the whole condo association is borrowing the money individuals are not required to give out their personal information and they can choose the HOA loan repayment plan that suits them the most.
So in effect while the whole condo association is borrowing money, all the condo owners need not repay the condo association loan in the same manner. Each condo owner can choose from the various condo association loan re-payment options that the HOA loan provider presents them with depending on his situation.
The various HOA loan repayment options include getting into a special condo assessment with the HOA loan provider where the individuals will have the option repaying the HOA loand or the condo association loan over a fixed term with reasonable interest rates. A special assessment is nothing but an improvement or repair that has been done on a property and for which bonds are issued to repay the cost that has been incurred.
The amount of this HOA loan or condo association loan can generally vary from anywhere from $50000 to $10 million with a HOA loan repayment period of one to seven years.
If on the other hand an individual can arrange cash there is no need to take any or HOA loan or condo association loan and they can straight away pay cash.
One can also take another condo loan by means of an equity loan or equity line of credit generally advised if there is some tax benefit to be derived out of it.
The least preferable means is by taking an advance on the credit card, this will entail a very high rate of interest and is only advised when there is something like airfare points or other reward programs attached with it.
Normally for collateral the HOA loan provider or Condo Association loan provider will not take anything from the condo owners rather they will take an assignment on any condo association special assessment related with the HOA loan repayment and the condo association's lien rights and assessment rights which they have over the condo owners.
While a condo owner may not have much choice in deciding whether they need that new gym or not at least they have the independence of deciding what HOA loan or condo association loan repayment plan they choose, be sure to go through the fine print and check with your tax advisor before finally settling on any HOA loan repayment plan.