How To Vet An HOA Before You Buy A Home

HOA rules can look harmless on a listing, right up until you learn you cannot park your work truck, keep your dog, run a small home business, or store your fishing boat anywhere on your own property. We dig into the real world side of buying a home or condo with a homeowners association, including why both of us are skeptical of HOAs and why some buyers decide to walk away as soon as they read the documents.

We get practical about the biggest HOA red flags for home buyers, starting with money. We talk through HOA financial health, why high monthly HOA fees do not guarantee stability, and what “capital reserves” actually need to cover. If reserves are thin and maintenance is piling up, that is when special assessments show up and those one time bills can be brutal. We also explain what to request before closing, including financials and any clues that a fee increase is already on the way.

Then we move beyond spreadsheets to what you can see and verify. We discuss how the condition of common areas like pools, clubhouses, roofs, and shared spaces can signal neglect or mismanagement. We also emphasize reading the covenants, conditions, and restrictions closely, because the HOA’s power over parking, pets, paint, gardens, RVs, and boats can collide with your daily life fast.

If you are buying in an HOA community, use this conversation as a checklist before you sign anything. Subscribe, share this with a friend who is house hunting, and leave a review with your biggest HOA question or story.

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Transcript

Why HOAs Raise Concerns

SPEAKER_01 0:01

Alright everybody. Laura?

SPEAKER_00 0:03

Jim?

SPEAKER_01 0:03

Today we're gonna talk about the HOAs.

SPEAKER_00 0:07

I'm not a fan, but that's me.

SPEAKER_01 0:09

I'm I'm not a fan either, but you know what? I've never I've never lived in a place where we had an HOA. Which is a homeowners association.

SPEAKER_00 0:20

I I couldn't have done it anyways. But they're like they they restrict gardening. They a lot of times they restrict gardening. They tell you what color paint you can do, whether you can have fences.

SPEAKER_01 0:37

Yeah, I I'm not a fan of anybody telling me what I cannot do regarding the property.

SPEAKER_00 0:42

Really, honey?

SPEAKER_01 0:43

Yeah, I know. So here we're gonna talk about the like red flag for home buyers for an HOA.

Walking Away After Reading Documents

SPEAKER_00 0:54

So for example, we just had a client who was doing a home inspection with us, and we ended up canceling it. Um the client had gotten hold of the HOA, their their like information, their contracts, and all of that stuff. He didn't like what they said, his wife didn't like what they said, and so they walked away from the contract.

SPEAKER_01 1:18

Makes sense. So here so I found an article, and we're gonna go over this. Some things you need to look out regarding the HOA.

SPEAKER_00 1:25

Red flags.

SPEAKER_01 1:26

Red flags.

Financial Health And Reserve Funds

SPEAKER_01 1:27

So the HOA's financial health. You need to look at that. I mean, just because some plays may have high monthly dues doesn't mean they are flush with cash.

SPEAKER_00 1:41

And if they are not flush with cash and they have high monthly dues, that is a concern for several reasons.

SPEAKER_01 1:48

Yeah, because then they need these, it's it's a capital reserve. They need to have funds in a bank account somewhere. So when it's time to replace the community room's uh roof, or it's time to rebuild the pool to pay for repave in the streets or you know, however their situation is, they need to have these funds. So you as a home buyer, you should ask how much how are they doing with their uh their capital reserves? How are their how are they funded?

SPEAKER_00 2:22

And they should actually be able to give you what is in their capital reserves, like they should be able to give you the bank statements, they should, you know, some general idea of what's going on and how much is in it.

Special Assessments And Real Costs

SPEAKER_00 2:35

We had one client, this has been a couple years, that bought into a condo association, and she specifically had us look at the roof, and her roof wasn't in bad shape at all. So she's there for one year, and the next year they jack up the rates and say that they're replacing everybody's roofs.

SPEAKER_01 2:57

Yeah, so this is where you need you need to go to the reserve. Do they have the money to take care of the things as they come up? Because I if they're like a lot of people, they are not planning ahead. And this is where you can get the special assessments. There was uh there was a condo building in Florida that made the news maybe two, three years ago. They they failed miserable mismanagement, yeah, spending the money elsewhere. Um, they had to assess each condo owner, I think it was $160,000 that they were going to pay within the next year. $160,000 to take care of the property. And then so immediately, and it was really sad. Some people just bought this place and moved to Florida to live, and then they get this assessment, and it's like, dude, we we don't have the money for this. And they certainly couldn't sell it when it when whoever's buying the place on NACLAN's $160,000 to take care of. You you lost $160,000 of just on that transaction in that, yes, and you've you've barely owned it. So you need that is a big pitfall of HOAs that they could have. I mean, not most of them are probably not run poorly like that, but you need to know all right, how are your fees? All right, what's in your reserves? If they don't have much money in the reserves, maybe they just fixed all the roofs, maybe they just fixed the pool that just a maintenance on the table. But you need to know, all right, all right, you guys don't have you like guys only have five thousand dollars. What's what was your expenses last year? And they go, Oh, we fixed this, this, this like okay, that's a little better. What's the future like? And and sometimes some buildings they they all should hire a company to come in, maybe do an inspection just outside the common areas, so then they can get do a reserve study going, hey, this is how much we are going to need ten years from now to replace the siding or or the common area. Do we need a new rooftop rooftop unit on the clubhouse? And that unit is going to be twenty thousand dollars to fix that, replace that unit. Do we have that money? So you you don't know. So you that's something that's a first red flag if they don't have much money in their reserve funds.

SPEAKER_00 5:36

So always make sure to ask for their financials and ask about any major upcoming expenses and if they have any plans to increase the um HOA fees because sometimes they already know when it's taking effect. Yeah, you don't want to be surprised if uh $167,000 bill. Yeah, or that's insane.

SPEAKER_01 5:57

Yeah, you don't want increased bills. So anyway, another thing look at is if there's HOA and they got common areas like pool, clubhouse, what whatever the situation is, um, common areas of the condo

Common Areas Reveal Mismanagement

SPEAKER_01 6:10

building. How what's the condition of those? If they're looking pretty ratty, then there's a problem. There's an issue are they collecting dues? Why are they not spending this money to take care of stuff? So that's that's an idea of uh mismanagement, uh neglect. You need to look around all the common areas to see how those

Rules That Clash With Real Life

SPEAKER_01 6:31

look.

SPEAKER_02 6:31

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SPEAKER_01 6:56

This this is the one that would really piss me off if I lived lived in any place like that. Because some of these they have their uh covenants and covenant conditions and restrictions. You need to make sure you have that before you buy and move into a place that has an HOA because it may not exactly fit your your lifestyle. Because if say you go to work and you have a company truck, and it's marked. Some HOAs do not re do not allow you to park a company vehicle in the driveway or in the street. That I want they won't pretend that nobody goes to work and nobody has company vehicles or anything like that. So if to me, that'd be like, no, we're we're done.

SPEAKER_00 7:41

If I can't Why can I not bring my company car home if that's all I have? That makes no sense to me.

SPEAKER_01 7:46

Or they don't allow you to allow certain pets, or you go your dog can only can only be smaller than 15, 20 pounds, and but here you are, you got a German shepherd. Wow, you're gonna get rid of it. That isn't gonna work. You're gonna get rid of your dog so you can move in this place, you have a bunch of carings tell you what to do. Nope. No, not at all. So check if you're HOA, look at those those uh restrictions that they may have. It's some of them will not, they don't want you to have a home-based business.

SPEAKER_00 8:13

I've heard that too.

SPEAKER_01 8:15

Which I mean, all right. Say you do hair on the side or dog groom it, and it's in your house. There's no flashing neon sign outside annoying anybody late at night. People come up and it looks like a comes like a regular, you only do one person at a time. You didn't you're a single person running a solo business. Somebody comes in and bring the dog so you can groom it down in the basement or maybe in the garage. No, there's no preaching to the choir. As soon as some as soon as somebody knows you're doing that, they see your ad. We've been watching Be Witch, the old one. Yes. Was it Gladys?

SPEAKER_00 8:54

Gladys Kravitz.

SPEAKER_01 8:56

Oh, the neighbor Gladys. She's immediately calling somebody and go, you know what they're doing? They're grooming dogs over there.

SPEAKER_00 9:02

And then you got Gladys was Karen before Karen was a thing.

SPEAKER_01 9:06

Oh, yeah. That's true. That is true. So you don't want that. So, and some places do not let you have RVs. You can't have your boats, they can't be uh seen. I marry respect to this one neighborhood. You could not have flowers that were certain color. They only oh, what was it? I think they could only be red and yellow. Those are the only color flowers you could have.

SPEAKER_00 9:29

That's insane. I don't like that. Yes.

Who Runs The HOA And Responsiveness

SPEAKER_01 9:33

So you also one thing you want to look at and like, hey, who in the heck runs the HOA?

SPEAKER_00 9:38

How easy is it to get a hold of them? Like if you send an email out asking for the contracts for the financial records, how long does it take them to get back to you? Do they get back to you?

SPEAKER_01 9:49

Yes, yes. And they go, I don't know who's running thing. I'm like, all right, that is a disorganized mess. Next, which could be if they're disorganized and not bothering anybody and nothing needs fit. Kind of how much control they have of stuff or they're supposed to. If they're there but they do nothing, they they're not responsible for taking care of everything, maybe wouldn't bother me as much. But as soon as you get a Karen in there, start jumping on the rules and everything. Nope, nope.

SPEAKER_00 10:18

Drive around the community and look for any signs against the HOA. We have seen that in um I can't remember where we were at, but there was a guy that had a sign up in his yard talking about the HOA and how they were horrible. And I I I mean it's been years. I can't remember what was all on the sign, but there was this big huge sign.

SPEAKER_01 10:41

Wow. Okay.

SPEAKER_00 10:42

So that's a red flag right there. I'm not flag right there.

SPEAKER_01 10:47

No, they've already the best predictor of future performance is past performances.

SPEAKER_00 10:54

Yeah. Have they taken care of things? Do they respond to people?

SPEAKER_01 10:59

Yep. So that's that's

Practical Checklist And Who HOAs Fit

SPEAKER_01 11:02

about it. The the four things they were, you gotta look at their financials. How healthy are they financially? Do they have reserves to fix things up?

SPEAKER_00 11:12

Or are they gonna expensive are your monthly dues? Because remember, these are on top of your mortgage already.

SPEAKER_01 11:18

Yes, yes. And say they only take care of the sh uh snow shoveling. Your fees shouldn't be that high. Right. But kind of depends on what they they go. But that's why you gotta look over their financials. The they do they have capital reserve funds to fix things if there's a major project that needs done? If they don't have much money, do they just fix things or is this money just kind of disappearing somewhere? Are the common areas rough? Are they getting neglected? The covenants, uh conditions, restrictions. Do they have such rules that you cannot drive your company vehicle back home? You can't have your dog, you can't run your home-based business. If they have those things like that, nope.

SPEAKER_00 12:04

Make sure you get those and read those before closing.

SPEAKER_01 12:07

Yep. If you like going fishing and you got a fishing boat, you buy a house, and then you finally realize like, oh shit, you can't fish. I'm not supposed to have a boat out in the driveway or in the backyard. All right, we're gonna do sell it. Kind of stuck. I mean, just bought the house, move it in. You're gonna I guess you could store your boat somewhere else, and that's an additional fee. Start a boat somewhere else.

SPEAKER_00 12:31

On top of the mortgage.

SPEAKER_01 12:32

And then you then you have a concern who who's actually running that and what's that person like? Are they easy to get hold of? If nobody knows who's runs it, all right, that's disorganized, which means nobody's keeping track of anything, which means they're probably not keeping track of their financials either.

SPEAKER_00 12:48

Which means you could get screwed.

SPEAKER_01 12:50

Yes. So anyway, if you're buying a house, condo, whatever, and there's an hoa, get hold of the information regarding that HOA, the financials, and then the uh covenants and restrictions, get hold of those. All right, Laura. Anything any more thoughts on this? Nope. Nope. Other than Laura, would you ever want an HOA? Nope. Yeah, me neither. So anyway, but it's not for everybody. Now, let's say, let's say Jim. That wait, hold on. Let's let's say you and I are old.

SPEAKER_00 13:22

Dude, I would have to be old AF to want to live somewhere with an HOA. I don't have any stairs here, I don't have any people here, I don't have any neighbors here.

SPEAKER_01 13:31

I know fine with the house. We designed the house so it's super easy. But if we did not do this, I still wouldn't move somewhere with an HOA.

SPEAKER_00 13:40

All right, but if you dude, we're gonna be old and on a fixed income. We can't afford an HOA.

SPEAKER_01 13:46

Well, there's there's always that. There's always that. But I'm saying if you're if you're elderly or say you're disabled, or you just don't like working on anything outside of the house, I I always think of a condo for HOAs, but they're not just condos. But a condo, you got HOA, they'll take care of the outside of the grass. I mean, that's that's ideal. It's ideal for some people.

SPEAKER_00 14:10

That's because I'm the one that knows the yard, not you.

SPEAKER_01 14:12

Because you like it.

SPEAKER_00 14:13

That's my point.

SPEAKER_01 14:15

Which is insane to me that she likes that. Anyway, I think that's it for this one.

SPEAKER_00 14:18

Thank you, everybody.

unknown 14:20

Bye.

SPEAKER_01 14:20

Bye-bye.