Home Owner Association Documents

Condominiums, townhomes and even detached homes in many the master planned communities in newer developments are governed by a Home Owner Association (HOA). These HOAs maintain common area landscaping, and community amenities (swimming pool, tennis courts, etc.). Some also include the maintenance of the buildings and roofs. When you purchase a home in one of these communities, you will receive a large set of documents. Here are some things you should get to know.

HOA Meeting Minutes

The HOA is required to provide the meeting minutes for home owner board meetings during the past 12 months. These minutes allows you to find out what is going on during the home owner association meetings. By reviewing 12 months of notes from HOA meetings, you should have a good idea if there have been any serious concerns raised during that time. These minutes also lets you know what types of issues are the most common concerns in this home owners association.

Reserve Forecast

The HOA is also required to provide a forecast of the planned use of reserve funds. By reviewing these plans and budgets, you can find out about the planned repair and maintenance schedule. If the reserve funds run low or if they are due to be depleted in the coming years, then there is a likelihood that the home owners association may need to levy additional assessments. The cost of repairs and materials have gone up in recent years, so reserve funds may deplete faster than budgeted.

Revenues and Expenses

It may be difficult to evaluate the HOA’s budget plan to determine if funds are allocated appropriately, but you can compare the actual figures to planned figures and compare them to the prior year’s figures. If  expenses are high or revenues are low, find out why.

Rules and Bylaws

Review the association rules. This may affect parking, number of occupants, quiet hours, pets, architectural committee rules, rental restrictions, fines, and other rules.

Hazard Insurance

The HOA is required to provide you with information on hazard insurance covering the common areas which typically covers all the structures. If you are getting a mortgage, your lender will need this information and make sure there is sufficient insurance to cover the property. If you are making a cash purchase, the responsibility for diligence falls upon you to make sure the HOA is properly insured.

The HOA hazard insurance does not include insurance on the interior of the property as that is typically your responsibility, not the HOA’s. You should contact an insurance agent to obtain “walls-in” insurance coverage which includes liability coverage to protect you from the unexpected. Get additional coverage for your personal property at the same time.