AssociationHelpNow ™ NEWYORK The official publication of the Hudson Valley NewYork Chapter of CAI — mailed to every chapter member! Read by homeowners, condominium and cooperative board members and property managers.
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Issue 5, 2018
Acquiring a Loan for Your Community Association By Alyssa Gautieri
CED Message: H udson Valley CAI just held its expo on October 25th, which was once again split between New Windsor and White Plains. We had a great turnout at both locations with managers, board members, and business partners. Thank you to all who attended. The chapter is looking forward to ex- panding into new regions in 2019. We’re also looking at having a trade show in Nyack.
“Reality...has a way of intruding into perfect scenarios, and many association boards and managers find themselves scrambling to find palatable funding options...”
We’ll be back with more events at the beginning of next year and will see everyone after the holidays. As always, we wel- come any recommendations for events. Raymond Dickey Chapter Executive Director, Hudson Valley CAI
Watch for 2019 events...check the website: www.cai-hvny.org If you wish to receive emails from the chapter, please send an email request to our office at email@example.com.
©istockphoto.com W hether it’s for a planned project or an unexpected repair, it has become increas- ingly popular for associations to borrow money to pay for capital repairs within a com- munity. Associations fund their reserve accounts on an annual basis for future repairs based on reserve reports con- ducted by engineers. Reality, though, has a way of intrud- ing into perfect scenarios, and many association boards and managers find themselves scrambling to find palatable funding options for capital projects and emergencies that arise from leaking pipes or extreme weather related events. What can an association do about acquiring a loan in the case of an emergency repair? We spoke with Jared Tunnell, senior vice president for National Cooperative Bank in Arlington, Virginia, to learn all about the best practices for acquiring a community association loan. Tunnell recommended that a community try its best to
put as much into reserves as possible on an annual basis to keep up with repairs and maintenance. While an asso- ciation should strive toward this goal, Tunnell noted that “very rarely are communities fully reserved.” “If an asso- ciation does not have enough reserves on hand to address a cost, or if the cost is for an un- foreseen or unreserved item, an association may need to take out a loan,” he said. When an association begins discussing the need for financ- ing, Tunnell first offered some important questions that an association should ask before speaking with a lender: What are the details of the project? How much is the project go- ing to cost? How much of the cost will the association choose to finance? “Before choosing a lender, an association should work with its manager, engineer and possibly an auditor to figure out what the total proj- ect will cost,” Tunnell said. “In addition, the association should always build in some contingency, such as adding
CONTINUES ON PAGE 2. While a bank can approve a loan in a few days, the process of acquiring a loan can lead to months of back and forth within a commu- nity. “The longest part of the process is really the precur- sor to the actual application and all of the decisions that ten percent in case of cost overruns.” Once a project is planned and a price is decided upon by the board, the board must ensure that it proceeds ac- cording to the rules set in its governing documents. “At the end of the day, the bank cannot lend to a community until the loan has been ap- proved in accordance with the community’s bylaws,” Tunnell explained. Depending on the commu- nity and its bylaws, a board may choose to consult home- owners prior to acquiring a loan. However, bylaws and governing documents vary and may dictate a range of voting rules, such as requir- ing that a board vote unani- mously or that the majority of unit owners be in favor.
Have your community association board members changed since last year? Be sure to update your board’s member names, titles (President, Vice President, Treasurer, Secretary, and Board Member), and contact information to ensure your board members receive all the latest CAI member benefits!
Update today: ONLINE at www.caionline.org EMAIL firstname.lastname@example.org
MAIL to CAI, P.O. Box 34793, Alexandria, VA 22334-0793
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