AUTHORITY TO BORROW

The authority for associations to borrow money is generally found in their governing documents (bylaws or CC&Rs). It can also be found in Corp. Code §7140(i), which allows corporations to obtain bank loans subject to any limitations found in an association's governing documents.

CC&Rs sometimes require membership approval for loans. Check your documents before you apply for the loan. Membership approval of the special assessment (for a capital improvement, repairing the common areas, etc.) may not be enough. The ballot may also require approval authorizing the board to enter into a loan agreement with a bank.

For a list of banks that specialize in loaning to homeowners associations, see "Banks" in our Service Directory.

Updated by ADAMS KESSLER 10/5/2008