Looking to take out a HOA loan for small condo association for much needed repairs.

Asked by Steve, Haverhill, MA Mon Aug 25, 2008

I own a condo in a small 4 unit building. We are self managed and are looking to get a HOA or condo association loan for repairs to the building. I have contacted several banks but no one will lend to an association that small.
Does anyone know if this is a possibility or of banks who will lend to us?
We are in deep trouble if we can't get these repairs done and don't know what else to do. Because of the current market, no one has equity in their unit and we are unable to come up with the money.

Please help!

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CondoAssociation.com’s answer
CondoAssocia…, , Boston, MA
Mon Aug 25, 2008
Depends on a number of factors; the main one being your association's ability to assess its members as collateral. Go to our website at http://www.condoassociation.com. Our business is providing condo association loans and HOA loans.
0 votes
Will Nesbitt, Agent, Alexandria, VA
Mon Aug 25, 2008
There are property managers that will take on a small association. In fact that is one of our specialties at Condo 1. We're in Northern Virginia near Washington DC, so I'm sorry I can't be of help to you.
0 votes
Melissa Manc…, Agent, Plainville, MA
Mon Aug 25, 2008
Hi Steve,

What a bummer…I know what you mean about the bail out. and if you bought 4 years ago, Im guessing you didn’t have a buyer agent, as buyer agency didn’t come into play until 05’, here in MA. I’m really surprised such a small owner association with no reserves was able to get financed, but again…it was a different time.

$500 a year per owner is not nearly enough to maintain the exterior of 4 homes although they are connected. Try contacting a management company to see what advice they have for you, and if they can’t help, try calling a real estate attorney. There is a 60+ unit complex in Easton that was self managed, and were in a severe defecit..they contacted a management company who was able to take a loan out in the company name and the unit owners paid it back in addition to a service fee to the management company. I didn’t mention this in my first post because your community is so small I didn’t think it would apply, but it sounds like you need as much information as possible.
Web Reference:  http://MelissaBMancini.com
0 votes
Steve, , Haverhill, MA
Mon Aug 25, 2008
We actually have set aside money for repairs but not nearly enough. The condo had been mis-managed until the current group of owners took over about 4 years ago. We have only been able to save roughly 2k a year since then and currently need around 50k for repairs.

The HOA or Condo association loans do exist but apparently not on our level. This is becoming increasingly dis-heartening. It seems as though I should have purchased a property that was nicer and out of my price range. At least the government would step in and bail me out.
0 votes
Melissa Manc…, Agent, Plainville, MA
Mon Aug 25, 2008
Hi Steve,

I agree with Will. Not only do lenders have concerns about a collateral free loan, but they are also looking at your situation and seeing maintenance expenses have already been deferred and mis-managed. Even though you are small and a home owner run association, money should have still been put aside even if its not "mandatory". Im afraid I dont know what advise to give you. Try speaking with the lender of your own property and see what they suggest, as they have an interest in this situation.
0 votes
Will Nesbitt, Agent, Alexandria, VA
Mon Aug 25, 2008
I wish I had an easy answer for you but I don't. The reason you can't find a loan is not because you're too small, but rather because you have no real collateral. If the condo association doesn't pay it's loan, the lender is left holding the bag. You cannot ignore the issues that face you as they will just degrade your already tenuous equity situation. I urge you to find and pay a property manager. I suspect you got into this situation by cutting corners and by not paying a property manager. In the end, even if you self-manage, there is only one way out: you will have pass a special assessment and or have a condo fee increase.
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