Does Your HOA Need Funding for a Major Project?
HOA Financing May Be an Alternative to a Large Special Assessment
Every HOA eventually faces major expenses.
Whether your community needs a new roof, structural repairs, balcony work, elevators, plumbing, paving, painting, or other capital improvements, the cost of maintaining a community can add up quickly.
Even associations that have carefully planned and maintained healthy reserve funds can find that today's construction and repair costs are significantly higher than originally anticipated.
And while the HOA may have money in reserves, the board may not want to spend a substantial portion of those funds on one project and leave the association unprepared for the next major expense.
So, What Can Your HOA Do When It Needs Significant Capital?
Is a Special Assessment Your Only Option?
Traditionally, many HOA boards turn to a special assessment when a major project exceeds the association's available funds.
A special assessment requires homeowners to come up with their share of the project cost, sometimes thousands or even tens of thousands of dollars.
For many homeowners, that can create a significant financial burden. It can also create collection challenges for the association and put additional pressure on the HOA board.
Fortunately, a large special assessment may not be your only option.
Consider HOA Financing
HOA financing can provide an alternative way for an association to fund major repairs, improvements and capital projects while spreading the cost over time.
Rather than requiring homeowners to pay the entire project cost upfront, HOA financing can allow the association to obtain funding and repay it over an established period.
Depending on the financing program, qualification may be based on factors such as the association's financial strength, assessment income, reserves, budget and overall ability to repay.
The financing is provided to the association, not to individual homeowners.
HOA Financing Can Help Your Community:
- Fund critical repairs and capital improvements
- Preserve existing reserve funds
- Reduce the need for a large upfront special assessment
- Spread project costs over time
- Improve the association's cash-flow management
- Address important repairs without requiring homeowners to pay the entire cost immediately
- Maintain financial flexibility for future projects
Who Is Responsible for HOA Financing?
The HOA or condominium association is the borrower and is responsible for repayment.
The association makes the required payments from its available income, assessments and other eligible sources of association revenue.
Individual homeowners are not personally borrowers simply because they own a home or condominium within the community.
The HOA board and management company remain responsible for maintaining appropriate assessments and managing the association's finances so that its obligations can be met.
Don't Let a Major Project Become a Financial Crisis
When a community needs millions, or even hundreds of thousands, of dollars for repairs and improvements, the first question shouldn't necessarily be:
"How much should we assess each homeowner?"
The better question may be:
"What financing options are available to our HOA?"
HOA financing can give boards another tool to consider when planning major projects and managing the association's long-term financial health.
Let's Talk About Your HOA's Financing Options
Every HOA is different, and financing availability depends on the association's financial condition, governing documents, project requirements, reserves, assessment income and other factors.
Before your board imposes a large special assessment or uses a substantial portion of its reserves, let's explore whether HOA financing could be a solution for your community.
Preserve Your Reserves. Fund Your Improvements. Give Your Homeowners Options.
Contact us today to discuss HOA financing for your community.
