If you are thinking of buying a home or condo that has a homeowner’s association, it’s important that you read the documents carefully before buying the home or condo. While it’s common for condo associations to have an HOA, it’s not as common for single-family homes. If you buy into a development that requires you to belong to its community, you’ll agree to join the HOA.
As a part of joining the HOA, you’ll have to agree to the HOA’s bylaws. Before you buy the property, it’s important that you understand what you are agreeing to so that you don’t have any unpleasant surprises down the road.
Know the Bylaws
Perhaps the most important thing for you to pay attention to is the association’s bylaws. These are the rules that you must abide by even though you own your own property. Each development will have their own bylaws.
Some developments have strict bylaws that restrict everything you do from painting your home’s exterior to hanging Christmas lights. Others are less stringent, but still have requirements you must abide by in order to keep everything uniform in the development. For example, some developments restrict the use of satellite dishes or at least restrict where you can place one on your home.
Other areas that bylaws can affect you include:
- Your voting rights
- The association’s budget and how it’s used
- How board members are elected and how long they can remain elected
Understand How Meetings are Run
You’ll also want to take a look at the meeting minutes that are available for review. While this might seem like a major bore, it’s a way for you to see how things are done at meetings. For example, do they allow common homeowners to impart their opinion or is everything done and said by board members alone?
Knowing what was discussed at the latest meetings can also help you know the status of the associations’ budget and potential for upcoming special assessments. For example, if there is talk of a special assessment to replace the roofs on the condo units in the association, you will know that you’ll have to cough up a lot more money at the closing to cover the special assessment.
You’ll Know the Association’sFinancials
You’ll want to know the association’s financials because this will tell you if it’s stable or not. The last thing you want is to buy a home in an association that is in financial trouble. All that this means is that your home and the common areas won’t be properly cared for as the association agreed to do upon starting it.
If the financials depict trouble for the association, you may want to look elsewhere. You can tell if an association is in trouble by reviewing the following topics:
- How many homeowners are behind on their association dues?
- How large are the association’s reserves?
- Is the association overdue on any bills?
Does the Association Have any Legal Trouble?
Finally, you’ll also be able to tell if a development is in trouble with the law. If any homeowners have a lawsuit against the development, it could signify financial trouble as well. If the homeowner wins the lawsuit, it could leave the association in financial trouble. This could mean that the association falls behind on their obligations, making your home lose value.
While HOA documents may seem boring and tedious, they hold a lot of important information. If you aren’t up for reading the documents, at the very least, have your real estate attorney review them for you. This way you will know if the association you are buying into is in stable condition and will provide you with a great place to live.