HOA Documents: Why Should I Look at Them? What Should I expect to Find?

Real Estate Agent with Solutions Real Estate CA DRE #01490977

A Buyer Asks - Why Should I Look at the HOA Documents? What Should I expect to Find?

Carlsbad Condo Community with an HOANot too long ago a first time buyer I was working with asked me "Why should I look at the HOA documents?"

She also wanted to know "What should I expect to find?" 

These are excellent questions, and any buyer in Carlsbad or other nearby Southern California communities needs to understand the HOA they are potentially buying into. 

Not all communities have an HOA (that's Home Owner's Association), but you can be sure if the property is a condo or PUD (Planned Unit Development) there is an HOA, and you had better understand as much as you can about the HOA, their Rules and Regulations, their financial standing (especially in this market of unpaid HOA dues, liens, short sales and foreclosures) before you move ahead with your purchase. 

A huge part of the buying process in California is the due diligence period, and as a buyer you MUST use this time period wisely. Reviewing and understanding the HOA documents is essential in case there are issuesthat would make you decide to not purchase the property. 

I am not an attorney so I cannot advise on the legal issues inherent in HOA documents, so seek legal advice if needed. You have a right, as a buyer to ask any questions and review the available information., and you may have some concerns or questions other than those I note below. Mine are intended purely as guidelines and are not an exclusive list of issues to review and consider during your purchase process. 


Are you OK with the specific rules and regs about pets, parking, improvements, use of the common space, parking (some HOAs do not allow street parking, nor parking of boats or RVs), your responsibilities as a home owner, etc.)


What is the HOA budget and how well are they managing it?Is the HOA fiscally sound? Are they bringing enough money on a regular basis to cover their costs, expected as well as possible?  Is there a substantial reserve for emergencies or they just getting by? Does the budget make sense?

You will want to know how many of the homeowners are delinquent in their monthly dues - if the HOA is not pulling in enough money then they cannot pay all the bills or other homeowners may be asked to up the anty. 


Is there any litigation in place, either by the HOA toward a vendor or developer or homeowner, or are they being sued. Litigation makes lenders squirrelly - they often won't lend in a community where there is litigation pending. And depending on what it is it might make you pretty uneasy, too. 


It's useful to see what actions the board is taking, what issues are brought before the board, the decisions they are making (or not making), and any projected fee increases or special assessments (which can be hefty - would you want to buy a condo if you knew there is a special assessment of $8000 coming?).  If there are no minutes, or the Board is not meeting regularly in accordance with the requirements, these are red flags.

This is not an exhaustive list nor intended to provide you with all the information you should investigate or be concerned about. Hopefully it will help in terms of an overview, and will generate other questions you will want to ask the HOA if they are not specifically addressed in the HOA documents you are given.

TIP - you might also check on Facebook and Twitter to see if homeowners are talking about the communitiy in any way, good or bad. You might really get the scoop from the locals.

ADDITIONAL NOTE - it is not uncommon for HOAs to not share information with non-owners. Some of them are very difficult to deal with. The other problem we often see is that it can take a long time to actually get the documents from the HOA, sometimes 2 weeks from teh time they are ordered. So be prepared in your transaction!!


Re-Blogged 5 times:

Re-Blogged By Re-Blogged At
  1. Ritu Desai 05/11/2011 04:00 AM
  2. Lynne Oliveri 05/11/2011 04:48 AM
  3. Bob & Leilani Souza 05/11/2011 02:08 PM
  4. Virginia Gardner 05/12/2011 03:12 AM
  5. Gabe Sanders 05/17/2011 01:34 AM
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Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

This subject is always important and needs to be addressed before you buy. I know of an investor who purchased a unit and is now suing the seller because he claims no one told him he couldn't rent out the unit after he purchased it...Well, is that your signature on the C C & R's?

May 11, 2011 03:41 AM #24
Jim Marcinkowski
Inlanta Mortgage - Fort Myers, FL

Very timely and important point you make. Some buyers are in so deep, emotionally, into their purchase that they don't want to see the potential negatives. As a lender, the condo docs are extremely important to us and should be for the buyer. They can be a deal killer.

May 11, 2011 03:51 AM #25
Kathie Burby
Coldwell Banker Mother Lode Real Estate - Sonora, CA
REALTOR, SFR, Tuolumne County Real Estate Guide

Great advice, Jeff. HOAs can rule a large part of your life and you better be okay with how they do it before signing on the dotted line! In today's shaky economy and current real estate market, it is more important than ever to understand the fiscal viability of an HOA.

May 11, 2011 03:54 AM #26
Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

Jeff: My young son just forced me to watch a South Park episode that pokes fun at folks who do not read those service agreements (like the iTunes of Mucrosoft agreements) and just click okay, agree or submit. Many folks do not pay attention to the HOA stuff either. Maybe there should be a cartoon about that.

May 11, 2011 03:55 AM #27
Barbara Altieri
RealtyQuest/Kinard Realty Group, Fairfield and New Haven County CT Real Estate - Shelton, CT
REALTOR-Fairfield County CT Homes/Condos For Sale

Jeff -- Reviewing the HOA docs is of the utmost importance to the buyer. Not only for the financial picture, litigation, reserves, etc, but also for general rules.  Pet restrictions can be a deal breaker as well. Some HOAs put a restriction on dog size.  I had a buyer a while back who had a 100 lb golden retriever. The HOA restricted to a max of 40 lbs.-- no exceptions.  Either the condo or the dog had to go. Guess which one won?

May 11, 2011 03:55 AM #28
Christine O'Shea
Christine E O'Shea Broker-Associate - Naples, FL

So very important.  The majority of the properties in Naples are gated and hoa.  There is a three day ruld for condo docs, but now homeowner.  There is also a rule in FL that if an owner is delinquent, not just a lien can be placed on the property but also a NOTICE OF FORECLOSURE.   This is not pointed out by agents or attornys but SHOULD BE.  Congrats on the feature!

May 11, 2011 04:47 AM #29
Annette Sievert
CB Valley Broker - Corvallis, OR
Corvallis, Oregon

It always pays off to read them. Some are so whacked that you ask yourself if the author smoked something.

Want to have 3 chicken in your backyard? Love to paint your new home pink? Need a fence of 6 feet? Have an RV/boat/5th wheel...? Want to have a Ham Radio 30 ft antenna?

Better check them out...

May 11, 2011 04:57 AM #30
Adam Mallory
eBroker Real Estate 619-566-ADAM - San Diego, CA
Broker, ABR, e-Pro

While most are filled with boiler-plate language, some will have very interesting (and very specific) rules and regs.  I always encourage Buyers to review them in great detail.  There's a reason they give them to you at the beginning of escrow...

May 11, 2011 05:18 AM #31
Frank & Jodi Orlando
Frank & Jodi Orlando Get Us A Home Realty Atlanta Homes Sale - Cumming, GA

Not long ago you rarely saw initiation fees for the HOA in our area. Now, instead of constantly raising the dues, many neighborhoods have initiation fees. The last thing our clients need is an extra charge just before closing, particularly with foreclosures...

May 11, 2011 05:45 AM #32
Linda Metallo DiBenardo
RE/MAX Impact, Lockport, Illinois - Lockport, IL

So many buyers move into properties with HOA's thinking all they have to do is pay their assessment and all will be taken care of.   They usually don't attend important homeowner meetings and it's unlikely they have ever read the HOA docs.  It's vitally important to know if you can rent your property, and extremely important to know the financial status of the association.  After all you are locking in your investment with a group of homeowners who may or may not be financially sound.  Buyers often think they are taking the easy road purchasing condos or townhomes, that's flawed thinking IMO.

May 11, 2011 05:49 AM #33
Morris Massre
Pembroke Pines, FL
Real Estate Instructor Broward County Florida

Unfortunately, nobody reads those things until it's too late or when there is a problem.  I always advise to read prior to signing.  Almost everything in Florida these days falls under an HOA.

May 11, 2011 07:10 AM #34
Robert Schmalz
West Los Angeles Real Estate Group - Santa Monica, CA
Cal. Lic Broker
One of the most important reasons in understanding your HOA, especially the financials, is that you want to make sure the HOA or the financials will not hinder you in a resale
May 11, 2011 09:34 AM #35
Yvonne Hurt
Long & Foster Real Estate - Reedville, VA
Northern Neck of VA Real Estate

Good post.  It is important to understand what type of deed restrictions, covenants, monthly or yearly fees are in place and the financial stability of the community.  Sometimes a large assessment for a needed community area upgrade is being planned.  Imagine your buyer's surprise to find out the community is assessing each home owner an additional $1,000 to cover playground updates, etc.

May 11, 2011 10:04 AM #36
Hannah Williams
Re/Max Eastern inc. - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-953-8818

Great information here Jeff .. Someone recently posited that some associations have the right to foreclose if you do not pay your condo fees ..Yes it is very important read your rules and regulations


May 11, 2011 12:58 PM #37
Virginia Gardner
Roy Wheeler Realty Co. - Charlottesville, VA
Realtor, Charlottesville, Serving Central Virginia

I feel a little late with this comment, but I have to say it also... great post.  It's really hard, I think, when you have buyers whose first language isn't English and they have to wade through these docs.  That was a case recently for me.  They wanted me to "summarize the highlights, like you did with paragraphs of the contract".  No way.  I made them read it, and then we met about it, and their eyes were wide open... no hanging linens on the clothes line, no toys left outside in the front yard over night, some pretty significant lifestyle issues for them.

May 11, 2011 02:21 PM #38
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Lloyd - that's an important point. Bet most don't know about this.

Maria - well I always read them for my buyers, too, and it's not fun.

Tim - indeed. Some many buyers don't seem to realize the importance.

Joan - absolutely. And I always recommend that buyers call with theri questions. The problem is that many HOAs will not share information over the phone except with the actual owners. They can make it very difficult to get the information that buyers need.

Alison - and there IS a lot of fine print. I have seen packages of HOA docs almost 2 inches thick in a few cases.

Wallace - an excellent point to consider.


May 11, 2011 04:17 PM #40
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

This is an unknown entity to many would-be condo buyers, the HOA.  Great discussion of things to expect when buying into one, Jeff.

May 11, 2011 06:24 PM #41
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

Jeff, we have such an excess of condos in our area & looking at these docs & financials is a must...great feature!

May 12, 2011 12:31 AM #42
Richard Weeks
Dallas, TX
REALTOR®, Broker

Before I moved to Dallas the area I worked most subdivision had HOA.  In East Dallas there are none.  I like it like that.

May 12, 2011 01:28 AM #43
Joe Delagdo

As the Secretary of my Homeowner Association in Fort Collins, it’s sometimes a challenge trying to maintain work, family and my HOA duties . However, when I discovered Association Online all of that changed. No need to worry about piles of paperwork, their software is quite easy to use and all our HOA documents are stored and managed online. This allows our Board of Directors to operate in a more effective way. You should check them out at www.associationonline.com or call (970-226-1324). I highly recommend them for all Homeowner Association needs.

Jun 29, 2013 02:24 AM #44
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Jeff Dowler, CRS

The Southern California Relocation Dude
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