Condos, Townhomes and HOA Communities: Review More Than the Monthly Dues

Ownership and responsibility

First determine what the owner owns—and what the association maintains.

Condominium, townhome, planned-community, and deed-restricted properties can divide ownership and maintenance differently. The deed, declaration, plats, bylaws, rules, budgets, insurance documents, and current association records should be read together.

A low monthly assessment is not automatically a financial advantage if reserves are weak or major projects are approaching. A higher assessment may include services or insurance that an owner would otherwise purchase separately.

• Unit, lot, common elements and limited common elements
• Roof, exterior, windows, decks, driveways and landscaping
• Utilities, roads, amenities and master insurance
• Regular assessments, special assessments and transfer charges

Rules and financial health

Restrictions and association finances affect daily life and resale.

Review rental, pet, parking, vehicle, architectural, maintenance, age, occupancy, business-use, solar, sign, and amenity rules before the contract deadline. Ask whether violations, disputes, litigation, insurance claims, capital projects, delinquencies, or pending rule changes exist.

Lenders and insurers may evaluate the project as well as the borrower and unit. Owner occupancy, reserves, insurance, litigation, deferred maintenance, commercial space, and concentration of ownership can matter.

• Current budget, financial statements and reserve study
• Recent meeting minutes and planned projects
• Master insurance and owner coverage responsibilities
• Lender review and project eligibility

Property-specific checklist

Questions and records to organize before the deadline.

• Obtain the declaration, amendments, bylaws, rules, plats and resale package
• Confirm current dues, special assessments, transfer fees and account status
• Review budgets, reserves, minutes, insurance, claims and major projects
• Identify maintenance and insurance responsibility for every important component
• Verify rental, pet, parking, architectural and use restrictions
• Ask the lender and insurer to review the exact community early
• Have the closing attorney review title, governing documents and unresolved legal questions

Primary sources

Continue with authoritative information.

These sources provide general background. The controlling documents, current law, contract, title record, policy, lender requirements, and property-specific professional advice govern the transaction.