Many of our condominium clients face expensive capital improvement projects. New buildings often must deal with problems caused by the developer and older buildings must address replacing and restoring major aspects of the buildings and its systems.
While cooperatives can obtain a traditional mortgage loan by pledging their building as collateral, condominiums cannot do this because each unit owner owns their individual apartment and the unit owners all own a percentage in the common elements so there is no traditional collateral. 

Condo Financing

What many condominium board members don’t know is that there is still a way for condominiums to finance capital projects. Several banks are now willing to make loans to condominiums by taking the condominium’s common charge stream as collateral. Basically, if the condominium doesn’t pay back the loan, the bank would have the right to demand that the unit owners pay their common charges directly to the bank. 

Check Your By-laws

If a condominium board is interested in obtaining this kind of loan, the by-laws must be reviewed to determine if the board has the power to approve the loan on its own or if the loan requires unit owner approval.
These loans are a great option for condominiums that are facing major projects they want to pay for overtime and not by having to impose a large immediate assessment.