HOA Due Diligence

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CalGal_IHB

New member
When purchasing a house with an HOA, what should a responsible buyer do to check out the HOA?

How much should be in the reserve account?

Would a potential buyer have access to past Board Minutes?

Should the Buyer have a lawyer or accountant review the HOA books?

Are there any good websites regarding this?

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Any suggestions would be appreciated.

NIR, what do you recommend your buyers do to check out the HOA?
 
CalGal,

When you enter a contract to purchase, you will be given HOA's CC&R and Rules and Regulations plus HOA's financial statements (showing reserve, income, and expenses).

If you purchase a condo, then there are usually 2 sets to review (master's and subdivision's).

You should scan through every single page because the material can stack up to 8" of reading materials.

You should carefully understand items that most important to you. Example:

1. Parking rules (can you park on the street). Do your guest need parking permits....Can you park your RV?

2. Pets - how many are you allow to have. Maximum pet size. Type of pets you are not allowed to keep.

3. Landscape design: Can you just do what you want?

4. Running powered tools - Curfew?

5. Security patroling.

HOA's Strength - how big? How strong? You can tell if the HOA team contract get renew year-after-year, an indication of good business management. You should read the financial statement to see if money is spent wisely. Good reserve is a good plus. $1M+ is good IMO.

You definitely want to know past and pending lawsuits to the HOA. This could effect your future assessments.

Seller has obligation to disclose to you any nuisance in the neighborhood as well, and a bad HOA is considered one.
 
oc_fliptrack,

I suppose the listing agent can arrange it. Most of these documents are available on-line, obtainable through HOA membership on-line account.
 
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