The Basics of Common Element Repair Loans LET ITASCA BANK & TRUST CO. HELP!
Is your community association planning for a new roof, siding or other common element repair project but is lacking the reserve funds needed to complete the work? Perhaps you have sufficient reserves but would prefer not to deplete the fund to complete the repairs. Consider letting Itasca Bank & Trust Co. help. We are an independent, locally owned bank preparing to celebrate 75-years of helping to shape our clients’ futures. For the past 20-years we have worked with over 1,000 community associations throughout Chicagoland, helping provide attractive financing options for the purpose of repairing or replacing common elements.
We often receive inquiries from smaller associations who are self- managed wondering if there are any loan options available for their common element projects. The answer is yes! In most cases, no one has explained the process to the board members who feel the choices for obtaining the funds are quite limited.
I’ve shared some commonly asked questions below along with the answers.
Q. How do we start the process for a Common Element Repair Loan with Itasca Bank & Trust Co. (IBTC)?
A. The process begins with just a call or e-mail to any member of our homeowner’s association team to discuss the project(s) the board is looking to undertake. We will ask some questions including the correct legal name of the association and whether you are professionally or self-managed. We will ask how many units comprise the association and how many of those units are owner occupied. We will want to know if a tax return is being filed and if the association is filing an annual report to remain in “good standing” with the State of Illinois. We will offer to meet with the board members and unit owners in person, on a video call or over the phone to discuss any of these issues in more detail as well as to address any questions or concerns about the common element repair loan process. Once we gather this information, a formal written proposal will be issued for consideration by the board members. We will also provide a checklist of the documents and information we need in order to complete our underwriting process and provide a formal credit decision.
Q. What kind of terms are available for a loan at Itasca Bank & Trust Co.?
A. We offer flexible terms including fixed interest rates ranging from two to 10 years. Depending on the size of the loan, we can offer the board an option to draw the funds as needed while the repair project is being completed. Even if your board has been turned down by another lender, IBTC may be able to provide you with a competitive bid and help you get the work completed.
Q. What does Itasca Bank & Trust Co. look for when applying for a loan?
20 | COMMON INTEREST®
A. We are going to review the financial health of the association including confirmation that the unit owners are paying their assessments on a timely basis. We are going to want to make sure the board is adding to the reserve fund or has a plan to do so and whether the purpose of the loan makes sense. Funds can only be borrowed for the repair or replacement of common elements. The list of common elements can be found in the Declaration for the association. The documents we review include the income statements, balance sheets, a recent delinquency report and the current year’s budget.
Q. Do we need an attorney?
A. Yes, an attorney representing the association will review the loan documents as well as your governing documents to confirm the board has the legal right to enter into a loan agreement. If you do not currently have an attorney that is familiar with community association law, we can refer you to the best names in the industry. Once the documents are approved by your attorney, we then set a date to have the loan documents signed.
Q. Who signs the loan documents?
A. Typically, the board president, treasurer and secretary sign the loan documents. Q. Are board members personally responsible for the loan?
A. No. Board members do not personally guarantee the loan nor are they personally responsible for the repayment of the funds. The board members sign the loan documents as officers of the association. And since we are making the loan to a commercial entity; meaning the not-for-profit homeowners association as a legally formed corporation, the board members are only signing because they hold their position on the board at that point in time.
Whether you’re a resident, board member or property manager, please know that Itasca Bank & Trust Co. can meet the unique lending requirements of your community association.
You have our pledge to provide quality service, flexible credit options and competitive pricing.
FOR ADDITIONAL INFORMATION, CALL:
Mark Stelter – VP & Commercial Loan Officer & Director of Community Association Lending
Itasca Bank & Trust Co. 308 West Irving Park Road Itasca, Illinois 60143
Phone 630-773-0350 Ext 220/ Cell 630-650-0350
MarkStelter@itascabank.com NMLS # 934563
• Fall 2022 • A Publication of CAI-Illinois Chapter
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