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All condo owners must help pay for new roof

FORT LAUDERDALE, Fla. – Jan. 7, 2016 – Question: The board of directors of our condominium association is contemplating taking out a loan to help pay for a new roof. That leads to all sorts of questions. How would this affect us? Would the lender put liens on the units and would they be harder to sell? What recourse would the lender have if we were unable to repay the loan? – Arthur

Answer: Check your association documents to make sure they even allow the board to take out such a loan. If so, the answers to your questions vary, depending on the lender.

Many lenders require that a special assessment be levied and used as collateral for the new loan. With a special assessment, all unit owners would owe a share of the roof loan that could be paid back all at once or over time. That would be in addition to their regular maintenance dues. The special assessment also acts as a lien on the individual units. The board can enforce that in much the same way it does nonpayment of the regular maintenance dues.

Each individual unit's value likely would be increased due to the new roof, but a buyer might have to make the special assessment payments if the seller did not already pay off the debt. While this could hinder resales, having a new roof is a big plus to most buyers because they know they won't have to worry about it for another 20 years or so.

In the very rare event the association stopped paying, the lender would sue the association and use the lien on the special assessment proceeds to get its money back. The lender would not be able to directly enforce the loan on the individual unit owners.

About the writer: Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He is the chairperson of the Real Estate Section of the Broward County Bar Association and is an adjunct professor for the Nova Southeastern University Paralegal Studies program.

The information and materials in this column are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed. Nothing in this column is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction.

Copyright © 2016 Sun Sentinel, Gary M. Singer. Distributed by Tribune Content Agency, LLC.