Short answer: A special assessment collects the gap from owners quickly. An association loan spreads it over years, with interest. Phased funding builds it into budgets ahead of each component's end of life. Most boards use a mix.
Special assessment
Per unit = gap ÷ units, or gap × each unit's ownership share. Monthly = per unit ÷ months.
- Pros: no interest, and it's done fast.
- Cons: the hardest hit for fixed-income owners.
Association loan
Monthly payment = P × r ÷ (1 − (1 + r)−n), where r is the monthly rate and n is the number of months. Our reports use an illustrative rate. It's not an offer.
- Pros: a smaller monthly hit.
- Cons: interest, covenants, and possibly an owner vote.
Phased funding
The gap is spread across the years before each component's remaining life runs out. This only works if your engineer confirms the schedule and no phase-two repair deadline forces earlier spending.
Questions to ask a lender
- Rate, term, and whether the rate is fixed or variable
- Collateral (usually an assignment of assessments)
- Draw schedule for repairs
- Prepayment terms
- Owner approval requirements under your documents
This page is not financial or legal advice. Check your declaration and bylaws with your association attorney.