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What do I need to know about buying an HOA home?

There are many HOA horror stories in Missouri and elsewhere, and you have likely heard at least a few. They typically cover fights over landscaping, paint color, fencing, lighting and a myriad other issues. If you are home-shopping in an HOA community, you should know about the by-laws and codes that govern such things so you can decide whether you want to live within those confines. But what you really need to look at is the HOA’s financial picture.

Zillow explains that prospective buyers should understand that HOA financial, legal and other documents are something that the home seller provides, and then, only after you are in escrow. It is worth your time to do some online research on the HOA and if you cannot find what you want, have your Realtor request the documents.

Some of the crucial documents you should ask for include:

  •          Demand statement: You should know if your home seller has outstanding HOA fees or violations that are unresolved.
  •          Minutes of board meetings: These will give you an idea of what types of issues the board addresses and how they address them.
  •          HOA bylaws: You need to know about restrictions on pets, how much fees are, and other requirements.
  •          Newsletters: These will help you get a feel for the community, groups and amenities.
  •          Reserve study: This is a report on the HOA’s reserve funds. It should tell you the amount set aside for long-term repairs of roads and roofs, operating expenses and more.
  •          Budget and financial statement: Does the HOA have money to pay its bills or does it need to raise fees?

You need to know what HOA insurance covers and what you will have to cover yourself. So be sure to ask for the insurance master policy binder.

It is always a good idea to have an attorney review any contract before signing. One with expertise in real estate or finance should be able to explain the HOA records and discuss your options. 

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