Why Buyers Should Review HOA Documents Before Closing

Community rules should not be assumed based on what a buyer sees while touring the neighborhood.

The governing documents may address matters such as:

• Architectural changes.
• Exterior paint and materials.
• Roofing requirements.
• Landscaping.
• Fencing.
• Outdoor structures.
• Parking.
• Property maintenance.
• Signs.
• Use restrictions.
• Assessment obligations.

Buyers should review the actual current governing documents rather than relying on general descriptions from a listing or prior owner.

Understand HOA Dues and Assessments

Homeowners association dues should be included when evaluating the ongoing cost of ownership.

Buyers may want to understand:

• The current assessment amount.
• How frequently assessments are billed.
• What services or common expenses the assessments support.
• Whether special assessments are currently due or anticipated.
• Whether unpaid balances relate to the property.

Assessment amounts and association policies can change, so buyers should verify current information through the applicable resale and association documents.

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Architectural Changes May Require Approval

Luxury-home buyers often plan improvements after purchasing a property.

Depending on the governing documents, exterior modifications may require association or architectural approval before work begins.

Potential projects may include:

• Exterior renovations.
• Roof changes.
• Windows and doors.
• Fencing.
• Landscape changes.
• Outdoor kitchens.
• Pool modifications.
• Exterior structures.
• Other visible property improvements.

A buyer considering significant renovations should review applicable restrictions before assuming a planned project will be permitted.

Do Not Assume an Existing Feature Was Automatically Approved

A home may contain additions, exterior improvements or other features installed by a prior owner.

Buyers should not assume that the presence of an existing feature establishes compliance with every association requirement.

When a particular improvement is important to the purchase decision, buyers may want to investigate relevant records and ask appropriate questions during due diligence.

HOA Rules and Future Renovations

Understanding the rules before purchasing is especially important for buyers considering an older or less-updated luxury home with plans for substantial improvements.

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Resale Documents Are an Important Part of Due Diligence

Depending on the transaction and applicable requirements, buyers may receive association resale documents containing information about the community and property.

Those materials may include governing documents, assessments and other association information.

Buyers should review the documents carefully and seek appropriate legal, financial or other professional advice when needed.

HOA Review Should Be Property-Specific

Two buyers may have very different concerns.

For one buyer, fencing rules may be important. Another may be planning a pool renovation, exterior remodeling or substantial landscaping changes.

The most useful HOA review focuses on the buyer’s intended use of the property rather than simply confirming that an association exists.