Buying a Home in an HOA

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 where the avoidable mistakes happen.

This page 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 to receive:

• 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 and the funded percentage disclosure.
• Twelve months of board meeting minutes (sometimes more).
• A statement of pending assessments, including any approved or anticipated special assessments.
• An insurance summary or certificate.
• A list of pending litigation involving the association.
• Any architectural rules, parking rules, leasing restrictions, and pet policies.

When the packet arrives, the contingency clock starts. Read it.

What I look for, in order

1. 1. 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.
2. 2. Special assessments. Past, current, and pending. I look for patterns. One special assessment 8 years ago is fine. Two in the last three years signals chronic underfunding.
3. 3. Insurance. Has the association renewed recently? At what cost? Is there exposure on the master policy that the owner has to backstop with HO-6 or condo insurance? In LA County right now this is the fastest-moving variable.
4. 4. Pending litigation. Construction defect cases, owner disputes, vendor disputes. Anything significant changes the buyer's risk profile.
5. 5. Twelve months of board minutes. This is where I find the unposted issues. Roof leaks. Plumbing failures. Insurance scares. Vendor terminations. Owner complaints that signal larger problems. Read every minute.
6. 6. Architectural rules. Especially if you plan to do anything with the unit. Painting, decks, balconies, windows, hardwood floors, HVAC swaps, and EV charging are common friction points.
7. 7. Leasing restrictions. If you plan to rent the unit out now or later, this matters more than any other clause. California is moving on rental restrictions in HOAs, and individual associations have widely different policies.
8. 8. Pet policies. Underrated, but a deal-killer if it is wrong for your situation.
9. 9. The transfer fee and HOA demand. What does it cost to close? What does the association say is owed at closing? Confirm this against the seller's escrow.

Red flags that cause me to advise renegotiation or cancellation

• Funded percentage under 30 percent with major capital expenses coming.
• Active or recently announced special assessment that was not disclosed in the listing.
• Pending construction defect litigation against the developer or contractors.
• Insurance non-renewal or large premium increase in the last 12 months.
• A board recall in the last 24 months.
• A pattern of high turnover among owners who have been around long enough to know what is wrong.

What HO-6 insurance covers and does not

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. Get an HO-6 quote before you remove contingencies.

How I work with buyers

I do not just hand you the disclosure packet and tell 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. That is the work.

Contact Hunter Mason when you are ready to look, or sooner if you want me to read a packet on a property you found yourself.