Buying a condo can be a good financial move. It can also be exciting if the condo has amenities you don’t find at any other facility. However, before you sign on that dotted line, you must read the HOA documents.
When you buy a condo, you buy more than the unit itself. You are now a part of the “association.” You don’t call the shots with the association, though. You have to follow their rules. If you don’t like their rules, it could make home ownership very difficult for you.
The rules the association sets could include restrictions on how you conduct daily life or how you sell your condo in the future. Before you make the decision to buy a condo, take the time to understand these documents. We’ll run through the most common reasons you’ll want to pay close attention to them below.
Understand the Restrictions
One of the largest complaints condo owners have is the restrictions they are held to when owning a condo. The covenants and restrictions can determine how you live. For example:
- Do you want a satellite dish on your condo? Make sure it’s allowed, some developments restrict this.
- Do they provide yard work maintenance or must you do it?
- Can you rent out your condo if you wish to?
The document called Covenants, Conditions, and Restrictions will detail all of these items and more. You’ll want to pay the most attention to these documents so you know what you are getting yourself into before actually buying the condo.
HOA Rules and Regulations
Expanding on the CC&Rs is the Rule and Regulations document. However, this document can change as often as the association likes. The board can change these restrictions at any given time. They are also the most fought against at board meetings if the condo owners don’t like them.
The Rules and Regulations really affect daily life as they determine what you can and cannot have in and on your property. They may dictate that no exterior accessories are allowed on your porch or yard. They may even go as far as restricting the size pet you can have in your condo. While these rules can change, knowing what they are before buying the home can give you an idea of what you might deal with in the future as an owner.
Minutes from HOA Meetings
This might seem boring and unnecessary but it can give you great insight into how the association is run. Does the board allow the common people to impart their opinion? Is there controversy going on with the association right now?
Reading the minutes might seem tedious, but you’ll likely get the most up-to-date information by reading them. You can determine if there is an impending special assessment or if the owners are fighting to get something approved that the association does not like. Again, knowing these things can help you determine if this is a good buy or not.
It may seem strange to view an association’s financial documents, but it affects you if you purchase the condo. You’ll be obliged to pay homeowner’s association dues. The assessment papers will let you know not only how much you’ll pay, but also the history of the fees. Have they consistently increased year over year? This may affect your decision.
You can also dig further, though. Look into the association’s budget. Do they have reserves? How do they use their budget? Are they consistently short and avoiding the tasks they agreed to handle? A disorganized association can mean a nightmare for new condo owners.
Keep in mind, your bank will also review the documents. Consider this an extra layer of protection. While it might seem even more restricting as a bank can turn down financing for a condo development if they don’t like how the association conducts business, it does protect your investment. The bank wants to make sure you are purchasing a unit where you can live fairly freely and where most of the other occupants are financially sound and there to make good on their investment as well.
You’ll want to make it a habit to review the HOA documents early in your decision making. If you know you like a specific unit, start researching the association. They play an important role in your life if you become an owner. It pays off to understand how they conduct business and what you might expect in the future. Of course, you can’t predict the future and won’t know when the board may change hands during elections, but starting off on the right foot can help.