HOA Special Assessments: The Hidden Financing Option Boards Overlook

When a homeowners association (HOA) confronts a major repair, the default solution is often a special assessment—a lump-sum charge divided among owners. But that approach has a critical flaw: it assumes every owner can pay their share on short notice. In reality, some cannot, and the resulting delay can turn a manageable repair into an emergency. The implications are significant for associations nationwide, as deferred maintenance threatens property values and safety. A less-known option—borrowing against future dues—could provide a faster, more flexible solution, yet many boards are unaware it exists.

Jack Miller, principal at Gelt Financial, a national private lender with over 37 years of experience, has closed loans for associations across the country. He notes that most boards default to special assessments simply because it is the only option they know. Gelt is one of the few private lenders that finances associations directly, an area Miller says has almost no competition because most lenders are not set up to underwrite this type of deal at all. This lack of competition means boards often struggle to find financing when they need it most.

How does association lending work? Unlike a mortgage on an individual property, an association loan is not secured by real estate. There is no collateral in the traditional sense, and no personal guarantees from board members or owners. Instead, the loan is secured by the association’s ability to pass a special assessment or raise condo dues to repay it over time. That structure means the association is borrowing against its own income stream, not against the building itself. Once the loan closes, the board typically still passes an assessment, but instead of collecting a large lump sum from every owner at once, the repayment gets spread out and the immediate repair gets funded right away.

The biggest obstacle Miller sees is not financial—it is personal. He described a recent case involving two elderly board members, one 88 and one 92, who served as president and treasurer of a 40 to 50 unit association. Both were retired schoolteachers, and both were reluctant to raise dues because they knew every homeowner personally and did not want to be the ones asking neighbors for more money. Miller’s response to that hesitation was direct: if you own your home, the repairs need to get done regardless of how uncomfortable the conversation is. Boards that avoid raising dues because they live alongside the people they would be charging often end up with a bigger problem later, when a roof leak or a failed window becomes an emergency instead of a planned repair.

Not every association needs outside financing. Sometimes individual owners fund their own share of a special assessment directly rather than paying a lender’s rate. Miller pointed out that one owner might reasonably ask why they should pay Gelt’s rate when they could just cover their portion themselves, and for owners who can afford to do that, it is a fair question. Where private lending makes the most sense is when the board needs the repair funded now and cannot wait for a lump sum assessment to clear.

Gelt is not able to help every association. Deals involving existing debt on the property typically do not work, since Gelt wants to be the first lender in, and associations that have let a problem grow too large sometimes need more repair work than makes economic sense to finance. Miller’s advice to boards is to get ahead of the timeline rather than wait for a crisis. Associations should be planning major repairs a year in advance and building relationships with banks and other traditional lenders first, since that financing is typically cheaper. Private lending exists as the option for boards that have already tried that route and still need a way to get the work done.

For more information on Gelt Financial, visit https://geltfinancial.com/.