Each year your condo association or HOA is required to pass an annual budget that in theory should pay all of the bills of the association.  The statutes require this.  Then a storm hits, or balconies start deteriorating and many Associations suddenly find themselves in desperate need to repair the common areas with no reserve funding to rely on.  Rather than pass a huge special assessment and force everyone to instantly dig deep into their pockets, many associations turn to banks for a loan.  The question is…is there anything in the condominium or HOA statutes that would prohibit this.  In simple terms, the answer is no.  In fact, borrowing money is expressly authorized in the Florida not-for-profit corporation statute.  So, unless there is a specific restriction in your governing documents that prohibits the Board from borrowing money, there really are no restrictions.

When borrowing money from a bank, the association will be required in the loan documents to pass a special assessment in an amount sufficient to fund the repayment of the loan, or promise to include the debt payments in the annual budget.  Several years ago, The Director of the Division of Florida Land Sales, Condominiums and Mobile Homes issued a Declaratory Statement that allows Condominium Associations to permit owners the option of paying the special assessment in full without interest or paying the assessment with interest over time.   The decision does not say the association must offer the option, only that it may offer the option.

Has your association borrowed money from a bank?  Was it a good idea, or did it turn out to be a long-term drain on the resources of the community?

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