- Do your HOA homework before you make an offer! Don’t buy the perfect dream home in the neighborhood from hell.
- Know who is in control. Almost always the association is a non-profit corporation and is governed by a board of directors. This is either the declarant (developer/builder) or elected residents. Only 30% of associations contract with a professional management company for day to day operations. Most associations are self-managed by volunteers.
- Know if your association is pre or post transition. The process of transferring control from the developer to a resident elected board is called ‘transition’. The developer has wide latitude to amend the documents and change development standards when in control.
- Ask for and read the governing documents (Covenants, Conditions and Restrictions; and By-laws) before making an offer.
- Ask for and review the association financials. Review the operating budget, balance sheet and make sure the reserve fund is adequate for future capital projects.
- Know that association fees (assessments) are required and that the board usually has the authority to impose special assessments.
- Know that you have to live by the rules or gain the support of the community to amend the governing documents and rules.
- Know that the board has the power to assess fines and late fees, restrict access to services, place liens, and foreclose.
- Know that HOA laws vary widely by state and are complicated. Right or wrong, lawsuits are expensive, time consuming and stressful. Better to educate yourself rather than becoming involved in a lawsuit.
- Don’t complain if you didn’t do your homework and purchased in a community with HOA issues. Your alternatives include accepting the issues, making things better by becoming involved, filing a lawsuit, or moving.
HOA-USA Home Buyers and Sellers
