You just got a notice that renovation is going to begin on the lobby and pool. You don’t remember seeing any notice about that and you definitely don’t remember voting for it. Did you miss something? Or did the Board of Directors (BOD) just decide without owner consent?
We get this question quite often. Can my condo association borrow money without voter consent?
The answer is yes, unless your CC&Rs directly state otherwise.
Every state has different regulating laws but in Florida your condo BOD can borrow funds with Board approval alone – that means without voter consent.
What does the law say?
Condo associations and HOAs typically have all the rights and powers of not for profit corporations, unless specific rights are revoked or amended in the association documents. Florida Statute 617.0302(7) states that not for profit corporations can:
“Make contracts and guaranties, incur liabilities, borrow money at such rates of interest as the corporation may determine, issue its notes, bonds, and other obligations, and secure its obligations by mortgage and pledge of all or any of its property, franchises, or income.
So, by law, your condo association can take out a loan or line of credit, unless its stated otherwise in the governing documents.
The Act doesn’t specifically address unit owner approval but Section 718.111(7)(a) of the Act does say that:
“no association may acquire, convey, lease, or mortgage association real property except in the manner provided in the declaration, and if the declaration does not specify the procedure, then approval of 75 percent of the total voting interests shall be required.”
If your association is securing a loan with association real property that’s when a unit owner vote may be required.
To sum up, unless your condo associations governing documents specifically require membership approval, then your BOD has the legal authority to borrow money as long as it’s not granting a mortgage lien on real property.
It’s all in the CC&Rs
Chances are high that you don’t know your condo association’s CC&Rs by heart. You may examine them yourself to see what is specifically stated about borrowing money and unit owner approval, but we recommend that you find a good community law attorney to review the documents. Many documents don’t require voter approval for borrowing unless the BOD is trying to borrow funds over a certain threshold.
If you are unsure about the legality of your situation, please contact Dania S. Fernandez and Associates. We have over 20 years’ experience under our belt and have seen our fair share of cases like these.
We offer legal assistance in all matters of condominium association law, homeowners and community association law, real estate litigations and transactions, residential and commercial closings, and insurance law.
We pride ourselves of our level of commitment to our clients. We love what we do, and we do it with utmost care and professionalism.
Our condo Board President borrowed a whopping $170,000 to pay our insurance premium WITHOUT THE BOARD’S CONSENT OR A VOTE.
Can we get rid of him based on this insane action without our knowledge?
He completely went behind our backs.
Our condo board borrowed over $500,000 for insurance from the funds we acquired through a lawsuit with the builders. And now our HOA fees have gone up 45% so we can pay it back. Is this move legal?
Our association borrowed $3000000 with the board authorization and will pay back $6000000 with interest and other mimos works with no approval of de owners
Our association borrowed $3000000 with the board authorization and will pay back $6000000 with interest and other mimos works with no approval of de owners is this correct
Our association borrowed $3000000 with the board authorization and will pay back $6000000 with interest and other mimos works with no approval of de owners is this correct
Our HOA borrowed $400000 with the board approval and with
interest $400000 without any home owners approval when all home owner not agreed and they want all home owner to pay as a special assessment monthly ,no home owners are agreed,can thia be legal even if no home owners are not agreed to the loan
In the state of New Jersey (Newark city) can a condo association take a loan of 2.000.000 to fix the building even if the owners say no?
How soon must Board approval for borrowing $400.000+ to pay insurance premiums be reported to unit owners?
Is there a requirement for a properly noticed Board meeting to ratify or approve the borrowing, and if so when must it be held?