Private Loans from Co-op / Condo Reserves: Good Idea? Oh, no, no, no, no

A board member wished to borrow a portion of the reserve fund for a personal business transaction. He agreed to (a) pay seven percent interest on the money, (b) repay the money within 30 days of a demand by the board, (c) execute an assignment of rental income from a rental property he owned, (d) execute a confession of judgment for the full amount of the loan, and (e) repay the loan in full and any accrued interest within 90 days. The board member’s transaction closed and the money was repaid to the association. Everything went off without a hitch — and then the firestorm ensued.   Read More……

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