search.noResults

search.searching

note.createNoteMessage

search.noResults

search.searching

orderForm.title

orderForm.productCode
orderForm.description
orderForm.quantity
orderForm.itemPrice
orderForm.price
orderForm.totalPrice
orderForm.deliveryDetails.billingAddress
orderForm.deliveryDetails.deliveryAddress
orderForm.noItems
g


th


O c


p i


th


to unit owners with great success as a “voluntary special assessment.” The notes raised much needed revenue for a number of projects, including enhancement of building amenities. Those enhanced amenities then accommodated greater future usage fees to help off-set the repayment of the borrowed funds.


co


Of course, the magic 8-ball doesn’t always take into consideration the minor details that affect the future when providing its answer. While the promissory note solution is extremely creative, it trades temporary income for future debt. If an association is making the trade, careful planning is necessary to calculate how the notes will be repaid. Credit toward the monthly assessment will lessen the association’s actual future assessment income. The best laid financial plans may be derailed by any number of things, so the temporary windfall of the promissory notes needs to be measured well against future necessities both known and unknown.


o


Wouldn’t association life be easier with a reliable magic 8-ball that provided all the answers? Ask a question, shake the ball,


ciation life b


and follow the direction it gives. Financial issues are always particularly difficult since every community association is faced with continually increasing income to meet escalating operating costs or unexpected expenses. Both board members and association managers spend endless hours debating the proper percentage for assessment increases, which fees might be increased by what amounts, and how it’s possible to raise more income without negative effects on people or property values. The 8-Ball Condominium shook its magic ball, and the ball revealed the solution was promissory notes from unit owners.


That’s crazy, right? It is difficult to grasp the concept of borrowing money from unit owners to raise funds for the association, and the association issuing a note promising to repay the sum. Is that just a foolish idea, or a realistic solution?


The idea worked several years ago for one condominium association. The board and manager worked with the accountant and attorney involved to implement a very creative financing idea. All unit owners in the association were offered the opportunity to “purchase” promissory notes in increments of $1,500 or $5,000, without any limit on the number of notes. The promissory notes offered repayment over periods of 60-months or 84-months by providing a fixed monthly credit on the assessment statements of the purchaser. The notes also offered an interest rate of 8.5%. Imagine that guaranteed no-risk return on an investment in today’s market. The promissory note offer was marketed


| 


The promise of raising association funds with promissory notes is real, but in this case the caveat belongs to the seller of the notes more so than the purchaser. Association accountants and attorneys have a wide variety of opinions on the issue of promissory notes, and if your magic 8-ball isn’t working, their consultation is crucial in determining if the note solution is right for a particular association. If all else fails ... there’s always the Ouija board option.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56