Contact Us 619-589-8800

Blog

Owner Approval Of Bank Loans

Posted by Joel Kriger | Oct 22, 2013 | 0 Comments

If your association intends to obtain a bank loan, we recommend that you check with us first to see if owner approval of the loan is required before proceeding with signing the loan commitment and paying any bank fees.  Associations often make the mistake of moving forward with the loan only to find out later that they cannot complete the loan transaction because they have not obtained the proper approvals earlier in the process. 

This is not to say that all governing documents will require owner approval.  It will depend on how the association's governing documents are worded. Often there are limitations on Board authority in the Bylaws or the CC&Rs that require the Board to obtain approval by a majority of the owners before entering into a contract that exceeds one (1) year. 

Another instance when you may need owner approval is when the loan installment payments will be funded by imposing a special assessment on the owners.  If the special assessment in the aggregate exceeds 5% of the budgeted gross expenses of the Association for the fiscal year in which the special assessment is imposed, then the Association is required to obtain the approval of a majority of a quorum of the members.  In this context, a quorum means more than 50% of the owners. 

Next time your association is considering a loan, contact us so we can review the governing documents and provide the board with a legal opinion regarding whether owner approval is will be required.

About the Author

Joel Kriger

Owner Practice Areas: Community Association Counsel Joel M. Kriger is the founder of Kriger Law Firm. A native of Pennsylvania, Joel graduated from Temple University in 1970 and moved to San Diego to attend the University of San Diego School of Law, from which he graduated in 1973. Joel maintai...

Comments

There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

Comments have been disabled.

CONTACT US TODAY

Kriger Law Firm is committed to answering your questions about Community Association General Counsel, Governing Document Revisions, Alternative Dispute Resolution, CC & R Enforcement Litigation, and Common Interest Development law issues in California.

We'll gladly discuss your case with you at your convenience. Contact us today to schedule an appointment.

The materials appearing on this website are provided for informational use only. They are in no way intended to constitute legal advice or the opinions of this law firm or any of its attorneys. You should not act or rely upon any information appearing on this website without seeking the advice of an attorney. Also, because the law is continually changing, the materials appearing on this website are not guaranteed to be correct, complete, or up-to-date.


Transmission and receipt of the information on the Kriger Law Firm website are not intended to create an attorney-client relationship, nor will the act of sending an e-mail to attorneys at Kriger Law Firm create an attorney-client relationship. Thus, we strongly advise against sending confidential or privileged information to us until you can establish such a relationship. Furthermore, we advise against sending privileged or confidential information through e-mail since we can in no way ensure the security of your e-mail.


Some jurisdictions would consider the materials appearing on this website to constitute advertising. The decision to hire a lawyer should not be based on the written information appearing on this website about the qualifications and experience of this firm and its members.


Links that may appear on this site are intended solely for your convenience in identifying and accessing other sources of information and are not to be construed as being endorsed by or affiliated with our office. Furthermore, Kriger Law Firm does not imply that it is legally authorized to use any trade name, registered trademark, symbol, logo, or seal that may be reflected in any of these links. Kriger Law Firm has sought to comply with all legal and ethical requirements in creating this website. Kriger Law Firm in no way seeks to use this website in any way as to represent anyone in a state where this site may fail to comply with the laws and ethical requirements of that state.


Menu