HOA loan

Because the lender and the attorney are still scratching their heads, it's very unlikely that any of us here will know something that they don't.

As for something like this being possible, it will depend on what your CC&Rs/Declaration and bylaws have to say about a number of things. These include the composition of your board, how assessments are calculated, and the proposed usage of the special assessment. It's also possible that your state's laws will have something to say, although your governing docs should be consistent with this. These things can be more complicated that they appear on the surface.

For example, the mixed communities I'm familiar with often charge the townhome sections a second assessment that deals only with costs that are specific to that area (eg. lawn care). Is this proposed project something specific to that area? Or is the project for something that benefits the community as a whole? In these sorts of communities it should be easy to decide. If the project benefits only the townhome section, those owners foot the bill (or most of it). If the entire community benefits, then everyone pays. There can be nuances, but this is generally how it works.

But even this can get into whether or not the HOA (entire community) is a single entity legally or if in fact it's two legal entities - and if the latter, if and how actions by one can encumber the other.. This is probably what is causing the trouble here. I'm actually surprised that this sort of situation hasn't occurred before and that there isn't case law out there somewhere. But your lawyer should know that.

Yes, we have a single board and one legal entity. The loan is to be spent on the TH roof replacement exclusively.

I quite understand that it's a complicated situation, given the lawyer response was "further investigation is needed" as well as lender's being unable to answer since Monday.

I just though someone here may have had a similar situation and is willing to share their experience.

Tom,

The tricky part is to remove the liability from the single family owners -- they do not benefit from the loan at all !

We have only one HOA, that's the problem. I just cannot imagine how, without having another TH association, to accomplish that.

But I am neither a banker, or a lawyer.

I think this may hinge on the purpose of the assessment.

If the townhome folks' second assessment is to be used exclusively for services such as lawn care, and the master HOA's budget includes things normally paid for by reserve funding (which would include roof replacement), then I can see that the special assessment would be the entire HOA's responsibility.

On the other hand, if the master HOA does not and should not contribute anything toward the townhomes' reserves and the townhomes' budget is meant to include such things, then I think this special assessment would clearly be the townhome owners' responsibility.

But I'm assuming that the situation is not that clear - otherwise the lawyer would not be confused.

I also think that the picture is being complicated by the fact that this loan/special assessment is meant to address the past failure to contribute to the reserves, which should have been happening all along and should have made any other funding unnecessary. I know that Florida has been taking steps to address lack of reserve funding for condos after the Surfside collapse, but I haven't heard whether they're looking at HOA, too.

VC

Had this exact situation in one HOA I was a member of. The single association consisted of 3-4 unit townhomes and single units. Dues based on size of one's unit (3 size units, average value of $420K). Major assessment of $20K to $25K per unit. 85% of owners approved. An agreement was made with a local bank for them to loan any owner requesting a loan with the association backing the loans. Loan amount and payment amount varied. One could also pay the assessment when billed with no interest. If a unit sold and had a loan against it, the pay off of the loan became a negotiating point in the sale.

I would assume if your covenants call for dues to be the same regardless of unit size then the special assessment would be equal.

Hope this helps.

In our situation the work to be done was done on both townhomes and singles so that question never arose thus I have no idea.

A HOA is ONLY funded by it's members for it's members. So if you are all members of the SAME HOA, then you all pay out equally unless it is in your documents otherwise.

I pay for a lot of things that do not provide me direct benefits. Here is a question? What if the roofs on the TH do not get fixed and they tumble in resale value. Will that not effect the values of all the homes in the HOA?

We had a pool in our hood. Most never used it. Many wanted to bury it. However, the fact we had a pool and clubhouse attracted potential buyers. More attractive buyers the more likely you get good offers when selling.

Think of it as an investment in the community than direct benefit.

I gather the above explanations do not make sense to you. Hence your next act should be to lobby your fellow owners to amend the declaration to achieve the fairness you insist is absent.

Why do only half of the residents benefit (according to you) in this scenario? Because the declaration says so; the declaration is enforceable as a contract; and a deal is a deal.

So would a lender loan GM money and let GM only include Buick for the loan and let Chevy go Scott free?

VC

My last association was all single family homes that varied quite a bit in sizes and personal amenities but monthly dues were the same per unit. My present association varies between duplex and single units also different in size but monthly dues are the same per unit. I say if dues are the same or an already agreed proportion then the same proportioned amount should be split over a uis

Thank you, John.

We have a collection of SFHs that essentially get only landscape maintenance + irrigation. The THs in addition get exterior maintenance, including painting, fence maintenance, collect money for the TH insurance and importantly roof maintenance/replacement for which they have their own reserve fund. Obviously, they pay more than SFs because they get more. There is, of course, common expenses too shared equally.

The previous boards did not collect enough money for TH roof replacement. Therefore, the current board wants to take a loan to replace roofs, and not have a special assessment for the entire amount.

Now, the loan will be paid by the TH community, however, the collateral will be shared as I understand by all.