Do you know of any condo associations that have raised money through issuing bonds or similar financial instruments?

Answer 1

It's unclear why a condominium association would take this route, given their income source called assessments and special assessments and the willingness of banks to loan monies to them.

If the association is a non-profit corporation, there may be limits on the corporation's ability to issue bonds. For example:

• Even though bond funding for a project may offer lower rates, there's zero 'intrinsic' value to the condominium association: intrinsic value usually found in non-profit bond issuers' projects, such as school upgrades, religious or charitable efforts, and so forth.
• As well, there may be a requirement that the corporation be designated a 501(c)(3) corporation by the Internal Revenue Service. Some types of non-profits given this designation include those involved in scientific work, testing for public safety, literary, or prevention of cruelty to children or animals.

Condominium associations need to raise money to repair or replace real estate assets. Reserve studies and contributions to reserves are the more generally accepted route to funding this work.

In case of an emergency or a crisis, such as a fire, a flood or an earthquake, the association should have a master insurance policy in force to cover any losses.