What to look for in HOA documents before you buy

You'll usually get the HOA's documents a few days before closing, and there can be hundreds of pages. Here's what's in the package, where problems tend to hide, and what to ask about.

What's in a resale package

Names vary by state, but most packages include:

Declaration or CC&Rs: the rules that run with the property, like rental limits, pet rules and what owners must maintain.
Bylaws: how the association is run: the board, elections, meetings and voting.
Rules and regulations: day-to-day rules the board can change more easily, like parking, noise and trash.
Current budget and financial statements: what the HOA collects, what it spends and how much it's saving.
Reserve study: an estimate of what big repairs will cost and when, like roofs, paving and elevators.
Board meeting minutes: often the most revealing pages. Upcoming projects, disputes and assessments show up here first.
Resale certificate or estoppel letter: a summary for this unit, like current dues, what the seller owes and any approved assessments.
Insurance summary: what the association's master policy covers and the deductible.

The 12 things to check

Dues, and how they've changed. Compare this year's budget with last year's. Steady large increases can signal underfunding.
Special assessments, approved or proposed. Check the resale certificate for approved ones and the minutes for ones being discussed. How to spot one coming.
Reserve funding. Find the percent funded in the reserve study and how much of the budget goes to reserves. How to read a reserve study.
Lawsuits. Look for litigation in the minutes, the resale certificate and the financial statement notes. Ask what it's about and whether insurance covers it.
Rental rules. Minimum lease terms, caps on how many units can be rented, and short-term rental bans.
Pet rules. Limits on number, size, weight or breed.
Renovation approvals. What needs board approval, like flooring, windows, patios or kitchens, and how long approval takes.
Parking and vehicles. Assigned spaces, guest parking, and rules on work trucks, boats and RVs.
Insurance and the deductible. Whether owners can be charged the master policy's deductible when a loss starts in their unit.
Fees at closing. Transfer fees, capital contributions and document fees, and who pays them.
Owners behind on dues. A high share of delinquent owners strains the budget and can affect lending.
Anything that limits your plans. Home businesses, age restrictions, right of first refusal, flags, fences, solar panels. Check whatever matters to you.

Know your deadline

Many states give buyers a set number of days after receiving the resale documents to review them, and sometimes to cancel. Your purchase contract and your state's rules set the details, so ask your agent or attorney exactly when your review period ends.

Questions worth asking the HOA

Is any special assessment approved or being discussed? If so, who pays it at closing?
When was the last reserve study, and is a dues increase planned?
Is the association in any lawsuit, and what's the insurer's position?
How many units are rented now, and is there a waiting list?

This guide is general information, not legal advice. For anything significant, like litigation, a large assessment or a rule that affects your plans, have a real estate attorney review the documents.