What are some common HOA disclosure issues that home buyers should watch out for?

1 What are HOA disclosures?

HOA disclosures are a set of documents that the seller of a property in an HOA must provide to the buyer before closing the deal. The content and format of these documents may differ depending on the state or HOA, but they usually include the HOA declaration, bylaws, rules, and regulations; budget, financial statements, and reserve study; assessment history and schedule; insurance coverage and claims history; litigation history and pending lawsuits; and violation history and enforcement policy. These disclosures are intended to inform the buyer of their rights and responsibilities as an HOA member, as well as any current or future costs or risks associated with living in an HOA.

3 How to review HOA disclosures?

Reviewing HOA disclosures is an essential part of the buying process, yet it can be daunting if you are not familiar with legal and financial terms. To ensure you don’t miss any surprises or costly mistakes, request the HOA disclosures as early as possible in the buying process, preferably before making an offer. Read the HOA disclosures thoroughly and ask questions if you do not understand something. Compare the HOA disclosures with the seller's disclosure statement and property condition report, looking for any discrepancies or red flags. Additionally, verify the HOA's compliance with state and local laws, and consult with a real estate attorney or an HOA expert if you have any doubts or concerns.

4 How to negotiate HOA disclosures?

If you find something in the HOA disclosures that raises your concerns, you may have the option to negotiate with the seller or the HOA. Depending on the situation, you could request the seller to lower the price, offer a credit, pay for some or all of the current or future HOA fees or assessments, remedy any violations or defects that affect the property or the HOA, ask the HOA to waive or modify any rules or restrictions that affect the property or your intended use, provide additional information or documents that are not included in the HOA disclosures, and walk away from the deal if necessary. Your ability to negotiate will depend on market conditions, seller motivation, and HOA cooperation. You should also be prepared to accept some trade-offs and compromises, as not everything may be negotiable.

5 How to avoid HOA disclosure issues?

To avoid HOA disclosure issues, it’s important to do your homework and research the HOA before you buy a property in it. A great way to get a better sense of what it is like to live in an HOA is to visit the community and talk to some of the residents and board members. Additionally, you should review the HOA website and social media accounts, if any, and look for any signs of problems or complaints. It’s also wise to search online for any news articles, reviews, or ratings about the HOA or its management company. Furthermore, you may want to hire a professional home inspector to inspect the property and common areas for any defects or damages, as well as a professional title company to check for any liens or encumbrances on the property or the HOA. Lastly, consider hiring a professional appraiser to assess the market value and appreciation potential of the property and the HOA.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?