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Understanding The HOA Before You Buy
Do You Need to Understand the HOA Before You Buy?
Understanding the HOA (Homeowners' Association) before you buy is an extremely important part of the home buying process. Many times, buyers do not complete their proper due diligence up front and are left stuck in a very sticky situation.
First, remember a homeowners' association is an organization of property owners that administers the rules and regulations, and upholds the covenants and restrictions of a development, subdivision, town, or home/condominium complex.
Based on that alone, it is imperative that you begin your research with requesting a copy of the conditions, covenants, and restrictions (CC&Rs) for the specific development you are looking to purchase in.
A proper review of those documents to make sure there is nothing off the wall that could inhibit your property ownership in any way is step 1. Your real estate agent can help obtain this information for you.
If you aren't working with an agent, usually it is a recorded document that you should have public access to via the 'Register of Deeds' link on your corresponding county's website. It is also wise for you to have your attorney put some eyes on it for you as well. This will help in going a long way to understanding the HOA before you buy.
The next information that is critical for your review before buying a home is seeing the financial statements of the HOA. These can be obtained through your agent or from the HOA president or member of the committee. It is very important you are able to retrieve these documents and that they show the HOA in a good financial state. It is also a good sign to see a solid reserve fund.
Without a good reserve fund, you and other homeowners in the development can be subject to assessments in the future. That may also be a sign that the development is being mismanaged. Keep in mind, if you are getting push back from the HOA members to be transparent with these documents, it should probably be a red flag for you.
As often is the case, appearances can be deceiving. Just because the HOA appears to be functioning well doesn't make it so. Do your homework, and use resources around you to double check information as well. Remember, regardless of the development, you may be putting yourself in a compromising situation that can lead to years of headaches for you, if you don't fully understand the HOA before you buy.
Got Questions about Home Owners' Associations?
Don't suffer in silence. Feel free to contact Skye Streppa at 828-713-5690, if you have a question on any real estate related matter.
Skye Streppa is an Asheville native who holds a wealth of local knowledge and a depth of character found only in the mountains of North Carolina. His attentive advocacy to his client’s needs creat....