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Can a Condo Association Borrow Money Without a Membership Vote?

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.

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