What is an underlying mortgage?
An underlying mortgage is a loan the HOA or condo association itself has taken out, typically to pay for major renovations or repairs the reserve fund and current dues couldn’t cover on their own.
Why does an underlying mortgage matter?
Taking on this kind of debt spreads a big cost over time instead of hitting residents with a massive special assessment all at once, but it also commits the community to ongoing loan payments that need to be factored into every future budget.
When You’ll Run Into This
This becomes a serious conversation the moment a major repair’s price tag is bigger than reserves can absorb without help. Our guide to what boards need to know before calling a bank covers what to weigh before taking this route.
