If you are really serious about buying a single-family home that is part of a homeowner's association (HOA), you should proceed carefully in the deal. It is very important to research an HOA before buying a house, and one of the best ways to do this is by reviewing HOA documents. Here are some of the most important HOA documents to review to help you gain a better understanding of the condition of the organization that controls the homes in this neighborhood.
Reading through the minutes from the HOA will reveal a lot of information about the organization. It may tell you about problems in the community. It may help you see where the issues are in the community. The minutes can also reveal what is going well in the community and more details about plans there are for the future.
The bylaws is a set of documents that all HOAs have, and these documents lay out the rules and ways things are handled in a community. Along with the bylaws, you might find a document called the CC&Rs, which stands for covenants, conditions, and restrictions, and this is something that will give you a good idea as to what you can and cannot do if you are a homeowner in this neighborhood.
The demand statement
A lot of people do not know that HOAs also have a record of delinquent accounts that you should be able to see, and this is called the demand statement. This statement basically tells you what homeowners are delinquent on their monthly dues to the organization, and it tells you how much money they owe. Viewing this document can give you a good idea about the financial picture of the organization.
The other document that will help you gain an even better understanding of the financial situation of the HOA is the budget. The budget will reveal how much money the HOA takes in each month and how much it pays out. It will tell you how much money the HOA stores away in their reserve fund, too, which is a long-term expense fund, and it can tell you how much money the organization paid out this year for capital improvements.
You should ask to see all these documents before proceeding with the deal, and you could ask for others too. Your real estate agent will assist you in helping you review these documents and knowing what to look for.