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By Andrea O’Toole, ESQ., & Mary Macias

This article first appeared in the Communicator Magazine, Summer 2026 Issue.

Introduction

Homeowners associations across California increasingly turn to bank financing to address critical infrastructure needs, fund large-scale capital improvements, bridge unexpected funding gaps and fund construction defect litigation. Whether the project involves repaving roads, replacing aging roofing systems or upgrading common-area amenities, the financial demands of maintaining a well-functioning community often exceed what current reserves and regular assessments can cover. In these situations, a bank loan can be a prudent and strategic tool that allows boards to act decisively without imposing sudden, burdensome special assessments on homeowners or, where special assessments cannot be avoided, allow owners flexible and long-term payment options.

Obtaining a bank loan is not as simple as filling out an application. Lenders evaluating association borrower...