What Should Buyers Know About an HOA Before Buying a Home?

HOAs can make a community easier to maintain, but they also come with financial obligations, rules, and shared decisions that buyers need to understand before purchasing.

The monthly dues are only one part of the picture. You also need to know how the association is managed, whether it has enough money saved for future repairs, and whether any major expenses or restrictions could affect you after closing.

What the condition of the community may be telling you

When touring a condo complex, townhome community, or neighborhood with an HOA, look beyond the home itself.

Pay attention to the roofs, siding, landscaping, roads, parking areas, hallways, elevators, and other shared spaces.

Do they appear clean and maintained? Are repairs being completed properly, or do you see signs of deferred maintenance and temporary fixes?

The appearance of the community cannot tell you everything about its finances, but it can help identify questions worth asking. Neglected common areas may indicate delayed repairs, limited reserves, poor management, or disagreements about how money should be spent.

Special assessments can become expensive

Monthly dues generally help pay for routine expenses and contributions to the association’s reserve fund. The reserve fund is intended to cover larger future projects such as roofing, siding, paving, plumbing, elevators, or other shared components.

If the association does not have enough money reserved when a major project becomes necessary, owners may be charged a special assessment.

That assessment could be several thousand dollars or considerably more, depending on the work and the number of owners sharing the expense.

This is why buyers should look beyond the current monthly dues. Low dues are not necessarily a benefit if the association is underfunded or postponing necessary maintenance.

Review the HOA documents carefully

Depending on the property, buyers may receive an HOA or condominium resale certificate along with other association documents.

These materials may include:

• The current budget
• Reserve information or a reserve study
• Meeting minutes
• Governing documents and community rules
• Pending or recently completed special assessments
• Planned repairs and capital projects
• Insurance information
• Owner delinquency information
• Pending litigation
• Rental restrictions
• Pet, parking, and renovation rules

Meeting minutes can be especially revealing because they may show recurring maintenance problems, upcoming projects, owner disputes, insurance concerns, or assessments being discussed before a final decision has been made.

The documents should be reviewed within any deadline provided by the purchase contract or applicable resale disclosure process.

You can obtain professional help reviewing the HOA

Buyers do not have to interpret every financial statement and legal document by themselves.

Depending on the situation, an attorney, accountant, HOA document review professional, insurance professional, or other qualified adviser may help evaluate the association’s finances, insurance, rules, and potential risks.

This can be particularly valuable when purchasing a condominium, when a large assessment is being discussed, or when the association has limited reserves, pending litigation, or complicated repair plans.

The cost of a professional review may be small compared with discovering a major financial obligation after closing.

HOA dues affect financing and affordability

Lenders generally include required HOA dues as part of the buyer’s monthly housing expense.

That means the dues can affect:

• How much you qualify to borrow
• Your total monthly payment
• Your debt-to-income ratio
• Your long-term housing budget

Seller credits or an interest rate buydown may help with eligible closing costs or financing expenses, but they do not eliminate the recurring HOA dues from the lender’s qualification calculation.

For condominiums, the association itself may also need to meet certain lending requirements. Insurance coverage, owner occupancy, litigation, reserve funding, and other project-level issues can sometimes affect whether a lender will finance a unit.

It is important to involve your lender early instead of assuming that qualifying for the purchase price automatically means the property will qualify for financing.

Make sure the rules fit how you want to live

A financially healthy HOA can still be the wrong fit if its rules conflict with your plans.

Before buying, confirm any restrictions involving:

• Pets
• Parking and commercial vehicles
• Renting the property
• Short-term rentals
• Exterior changes
• Landscaping
• Home businesses
• Holiday decorations
• Renovations
• Guests and shared amenities

Do not rely only on what is visible in the community or what another resident says. Review the written rules that will apply to you as an owner.

A well-run HOA can be a benefit

An HOA is not automatically a negative.

A well-managed association may provide predictable maintenance, protect shared amenities, coordinate large repairs, and help preserve the overall condition of the community.

If you later sell, clean common areas, responsible financial management, adequate reserves, and completed maintenance can make the property more appealing to buyers. The HOA’s financial condition and documents may also affect how easily a future buyer can finance the home.

The goal is not necessarily to avoid an HOA. It is to understand what you are buying into before you become responsible for its rules and expenses.

Considering a Home With an HOA?

If you are considering a condo, townhome, or house within an HOA, I can help you identify the documents to request, the questions to ask, and the details that may affect your offer, financing, and long-term costs.

Email brandice@brandiceraybourn.com or call or text 425-367-3881.

Brandice Raybourn
Real Estate Broker | Coldwell Banker Danforth
Serving Seattle, the Eastside, King County, and Snohomish County