Condo Buyers Beware: How to Assess the Health of a Building's HOA Before Making a Purchase
When buying a condo, it's so important to assess the health of the building's Homeowners Association (HOA) to avoid any surprises down the line. Here are some things a buyer should do to assess the health of a building's HOA before purchasing a condo:
Review the HOA's financial statements: Ask for copies of the HOA's financial statements and review them carefully. Look for signs of financial stability, such as healthy reserves, consistent income, and low delinquency rates.
Understand the HOA's governing documents: Review the HOA's governing documents, including its bylaws, rules, and regulations. Make sure you understand the HOA's policies on issues such as pet ownership, rental restrictions, and renovation guidelines.
Check for any pending lawsuits: Find out if there are any pending lawsuits against the HOA. This could indicate potential financial problems or other issues.
Talk to current residents: Ask residents you meet in the hallway or elevator of the building about their experience living in the community. Ask about their satisfaction with the HOA, any issues they've had, and how the HOA has handled them.
Attend an HOA meeting: Attend an HOA meeting to observe the board in action. This will give you a sense of how the HOA operates, how decisions are made, and how conflicts are resolved.
Review the building's maintenance records: Review the building's maintenance records to see if any major repairs or renovations are planned or have recently been completed. If they are funded from the reserves or if a special assessment will be given to the owners. This will give you a much better sense of the HOA's priorities and financial planning.
By doing your due diligence and assessing the health of the building's HOA, you can make a more informed decision about whether the condo is the right fit for you.
We also recommend hiring a company like CIDA Analytics to analyze the HOA docs for you if it feels too overwhelming. We’ve had clients use this service and they found the additional expense worth it as it let them move forward with their eyes wide open as to how prepared the HOA is for the future.