I belong to a New Jersey HOA of about 300 homeowners. Our board decided to obtain a $500,000 bank loan. It's been spending money like water and used up all the money that was designated for major repair work that was needed. Now, it has decided to take out a loan to do that work and any other things that it may think of. Is this legal. Aren't there some kind of requirements for doing this? I tried researching this in the Smith, Estis and Li publication "NJ Condominium & Community Association Law" and on sites dealing with HOA issues but I could find nothing related to this.
The authority of an HOA to take particular actions is governed by the Declarations of the association and its bylaws with only minimal statutory oversight.
It is possible that their actions, either in spending money raised for purposes other than those authorized for that money, spending money contrary to an approved HOA budget, or in obtaining loans for a purpose not authorized by the bylaws, violates those terms.
But there is no universal answer for all HOAs. Their actions need to be compared to the governing documents.