Free checklist

12 HOA red flags to check before you close.

Most buyers get their HOA documents a few days before closing and never read them. Here's what to look for, where to find it, and what to ask. Keep it open while you go through your package.

1. Special assessments

   A one-time charge to every owner, often thousands of dollars, for big repairs like roofs or elevators. Look for ones that are approved, proposed or even just discussed.

   Where: board minutes from the last 12 to 24 months, the budget, the resale certificate.

   Ask: "Are any special assessments approved or planned? Who pays one that's approved before closing?"

2. Underfunded reserves

   Reserves pay for future repairs. When they're low, owners usually make up the gap through assessments or dues increases. Under about 30% funded is a common warning sign.

   Where: the reserve study (look for "percent funded"), the budget's reserve contribution.

   Ask: "When was the last reserve study, and what percent funded are the reserves?"

3. Lawsuits

   Litigation involving the association can lead to legal costs, assessments and trouble getting a mortgage. Construction-defect and insurance disputes are the ones to watch.

   Where: board minutes, the resale certificate, insurance disclosures.

   Ask: "Is the association involved in any lawsuits, and what's the potential cost to owners?"

4. Rental caps and minimum leases

   Many associations cap how many units can be rented, set a minimum lease length, or keep a waiting list. That matters if you might ever rent the home out.

   Where: the leasing article of the CC&Rs or declaration, the rules and regulations.

   Ask: "How many units are rented now, and is there a waiting list?"

5. Short-term rental bans

   Airbnb and VRBO rentals are often banned outright, even where long-term rentals are allowed.

   Where: CC&Rs leasing and use sections, rules, recent amendments.

   Ask: "Are rentals under 30 days allowed, and are any rule changes proposed?"

6. Pet limits

   Limits on the number, size, weight or breed of pets are common, and some apply to pets you already have.

   Where: CC&Rs animals section, rules and regulations.

   Ask: "Are my pets allowed as they are, including their breed and adult weight?"

7. Dues increases and delinquencies

   A big jump in dues, or many owners behind on payments, can signal money trouble. High delinquency can also make some loans harder to get.

   Where: the budget compared with last year's, minutes, the resale certificate.

   Ask: "What were dues the last three years, and what share of owners are behind?"

8. Insurance deductibles passed to owners

   The master policy may carry a large deductible that the association can charge to the owner whose unit a loss started in.

   Where: the insurance section of the CC&Rs, the master policy summary.

   Ask: "What's the master policy deductible, and when is it charged to an owner?"

9. Renovation approvals

   Changes to floors, windows, doors, solar or anything outside can require board approval, specific materials or waiting periods.

   Where: architectural control section of the CC&Rs, design guidelines.

   Ask: "What approvals would my planned changes need, and how long do they take?"

10. Parking and vehicle rules

    Assigned spaces, guest limits and bans on trucks, RVs, boats, trailers or commercial vehicles are common.

    Where: rules and regulations, CC&Rs use restrictions.

    Ask: "How many spaces come with the unit, and are my vehicles allowed?"

11. Transfer fees and right of first refusal

    Some associations charge fees when a home sells, or keep the right to buy a unit before an outside buyer can.

    Where: CC&Rs, the resale certificate, the fee schedule.

    Ask: "What fees are due at closing or when I sell later?"

12. Deferred maintenance

    Repairs that keep getting postponed tend to become emergencies, and emergencies become assessments.

    Where: the reserve study's component list, board minutes, any building inspection reports.

    Ask: "What major repairs are due in the next five years, and how will they be paid for?"

This checklist is general information, not legal advice. Rules vary by state and by association. For significant concerns, have a real estate attorney review your documents before closing.