Question:
Is it legal for a HOA Board to take out a loan for capitol improvements that is against the dues and does not affect the Owners rights?
– Christine
Answer:
Hi Christine,
Whether or not your HOA has the authority to borrow money or secure a loan depends on your governing documents. California Corp. Code Section 7140 permits loans but must still be within the regulations of the governing documents. Your HOA may also require membership approval, though it still depends on your governing documents. Keep in mind that banks require HOAs to pledge their accounts receivable or special assessment to use as collateral for the loan.
Disclaimer: We are not lawyers. The information provided on this website does not constitute legal advice.
