About half the homes we sell in the South Bay sit in a common interest development. The avoidable mistakes happen when buyers study the unit but never study the association. Here is the checklist we use.
About half the homes I sell in the South Bay are in some kind of common interest development. Most buyers worry about the unit and the building. Almost no one studies the association before they remove contingencies. That is exactly where the avoidable mistakes happen. This is the checklist I use when I represent a buyer in an HOA community.
The disclosure packet is the deal. In California, the seller has to deliver a stack of HOA documents to you within statutory timelines. This is required by the Civil Code, not optional, and the contents are specified. Expect the CC&Rs, Articles of Incorporation, Bylaws, and Operating Rules; the current annual budget and the most recent audit, review, or compilation; the most recent reserve study with the funded percentage disclosure; twelve months of board meeting minutes; a statement of pending and anticipated special assessments; an insurance summary; a list of pending litigation; and the architectural, parking, leasing, and pet rules. When the packet arrives, the contingency clock starts. Read it.
What I look for, in order. First, the reserve study and funded percentage. I open this first. Anything under 50 percent gets flagged. Under 30 percent and we are likely renegotiating or walking. Second, special assessments, past, current, and pending. One special assessment 8 years ago is fine. Two in the last three years signals chronic underfunding. Third, insurance: has the association renewed recently, at what cost, and is there exposure on the master policy that the owner has to backstop with an HO-6 condo policy. In LA County right now this is the fastest-moving variable.
I keep going down the list. Fourth, pending litigation: construction defect cases, owner disputes, vendor disputes. Anything significant changes the buyer's risk profile. Fifth, twelve months of board minutes, where I find the unposted issues: roof leaks, plumbing failures, insurance scares, vendor terminations, and owner complaints that signal larger problems. Sixth, architectural rules, especially if you plan to touch the unit. Painting, decks, balconies, windows, hardwood floors, HVAC swaps, and EV charging are common friction points. Seventh, leasing restrictions, which matter more than any other clause if you plan to rent. Eighth, pet policies, underrated but a deal-killer if they are wrong for your situation. Ninth, the transfer fee and the HOA demand: what it costs to close, and what the association says is owed, confirmed against the seller's escrow.
Some findings push me to advise renegotiation or cancellation: a funded percentage under 30 percent with major capital expenses coming, an active or recently announced special assessment that was not disclosed in the listing, pending construction defect litigation, an insurance non-renewal or large premium increase in the last 12 months, a board recall in the last 24 months, or a pattern of long-time owners leaving who knew what was wrong.
Know what your HO-6 covers. In a California condo, the master policy covers the building and common areas. Your individual HO-6 policy covers the inside of your unit, your personal property, your liability, and a loss assessment coverage that picks up your share of certain master-policy deductibles. Read your master policy declarations to know where the line is, and get an HO-6 quote before you remove contingencies.
The work is not just handing you the packet and telling you to read it. I read it with you. I tell you what I see, what worries me, what does not, and what the right counter-offer or contingency action is. This page is informational and is not legal advice. For decisions on your specific transaction, consult counsel.
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Courtney and Tony Self and the TownhomePros team have been navigating South Bay townhome and HOA communities for 15+ years. Reach out, free consultation, no pressure.
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