Before purchasing a condo, it is important to review the HOA documents to evaluate the financial stability and general operation of the community in question. Here are some essential aspects to consider:
HOA Financial Documents:
Reserve Study: This report should outline the expected costs for major repairs and replacements (such as the roof, parking surfaces, elevators, etc.) and the amount the HOA has set aside for those expenses. A well-funded reserve demonstrates proactive planning and minimizes the likelihood of homeowners facing special assessments in the future.
Financial Statements and Budgets: Examine these documents to determine if the HOA is collecting sufficient fees to cover operational costs and maintain a robust reserve fund. Seek evidence of a track record of balanced budgets and prudent financial management.
Demand Statement: This statement discloses any outstanding HOA fees or violations associated with the specific condo unit you are considering. Unpaid fees may become your responsibility as the new owner, and violations could signal ongoing maintenance concerns.
HOA Governing Documents:
The Declaration of Covenants, Conditions, and Restrictions (CC&Rs) details the guidelines and regulations that homeowners must adhere to. It is important to take note of limitations concerning pets, noise levels, property alterations and, if your are purchasing as a rental, any leasing restrictions.
Bylaws outline the operational processes of the HOA, such as voting procedures, meeting schedules, and board member selection. Understanding the bylaws enables homeowners to engage actively in the HOA.
Additional Resources:
Meeting Minutes: Examining previous HOA meeting minutes can reveal continuous conversations about maintenance problems, upcoming initiatives, or possible disputes within the community. Nevertheless, it is important to acknowledge that despite regulations stating otherwise, some HOAs, particularly their Directors, attempt to sometimes operate secretly by conducting unofficial meetings that are not adequately recorded for the homeowners or for matters that they don't want public.
Newsletters: HOA newsletters provide a glimpse into the overall environment of the HOA, upcoming activities, and recent updates.
Beyond the HOA Documents:
Visual Examination: Take a stroll around the property and observe any indications of postponed maintenance in shared spaces. Poorly maintained landscaping or buildings could indicate inadequate financial management by the HOA.
Engage with Residents: Interacting with current residents can provide you with insightful, direct information about the HOA's efficiency, the general atmosphere of the community, and possible issues to be aware of.
Neighbor harassment by board members is also problematic in some communities. Rogue board members can make a community unbearable and should be recalled.
Carefully reviewing HOA documents and getting to know the community will assist you in assessing whether owning a condo in that particular HOA is the right choice for you. Keep in mind that the information made public relies on the individuals in charge of documenting meeting minutes and maintaining the required paperwork. Should you encounter any questionable details, it is advisable to verify them with the seller.
Other Resources
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(C) 2024 Jeff Sorg
"Trust your instincts"