Demystifying HOA Documents - A Home Buyer's Guide!

 Congratulations on your home buying journey - you are close to the finish line!  

If you are purchasing a home in a neighborhood that has a Homeowner Association, then under Virginia law, you have the right to receive a copy of the HOA package and a 3 calendar day right to review the package.  Under this law, you are allowed to terminate your contract once you get the HOA Disclosure Package - BUT it must be done within that 3 day window!  

WHAT IS INCLUDED IN THIS PACKAGE?

The package will contain a large number of documents, and with only 3 days to review it, what are the most important documents to review first?  Of course, you should review them all, but some are probably a little bit more critical than others.  Here is the order I normally recommend my buyers to review the package:

• Articles of Incorporation - this is a very brief document, and will give you the basic information about the association!
• ByLaws - this document will explain about the board - how the board members are elected, the term limits of the board members, etc - basically it explains how the board of directors will function!
• Covenants & Restrictions - these exist to make the community a pleasant community to live in - but you want to make sure you can abide by the covenants & restrictions!  For instance, I once owned a condo and there was a restriction that said we could not put garbage down the garbage chute after 8 pm, because of the noise level it would make!  
• Rules & Regulations - these will be more specific than the Covenants and Restrictions.  They will cover anything from yard signs, front porch accessories, what kind of storm door is allowed on your house, whether or not you need to keep garbage cans out of sight, etc!  Again, you need to decide if you can abide by these Rules & Regulations!
• Financial Documents - these documents will let you know how financially sound the HOA is - for instance is there enough money collected to cover the budget and maintain a healthy reserve fund.  Looking at these documents could let you kow if there will be big increases or special assessments in the future!
• Meeting Minutes - this tells you how well the association is run and if there are constant issues or complaints that arise from the homeowners in the community!
• Compliance Inspection Report - someone from the HOA Management will generally go by the house to make sure that the house complies with the exterior requirements of the HOA!  I have had compliance inspection reports that show a fence that is leaning and needs repair; I have had compliance inspection reports note decks that had no HOA approval for; I have had compliance inspection reports note weeds growing out of the cracks in a driveway or garbage cans in view from the street!  Depending on what is noted, you may wish to have the current owners take care of those things, or they could become violations noted when you go to sell!
• Insurance - if you are buying a condo or townhome, most HOAs will include a master insurance policy.  If there is common areas in the neighborhood or amenities, the HOAs should have insurance on these areas as well.  You want to make sure that they have a current insurance policy!
• Pending Lawsuits - if the HOA is a party to a pending lawsuit, this may be a red flag for you.  
• Fees & Assessments - understand the fees and if there are any special assessments and make sure they are within your budget!
• Architectural Guidelines - if you plan to do any renovations to the exterior of your home, or your yard, you need to make sure you understand the architectural guidelines of the community and how they will affect your future home improvement projects.

As you venture into the realm of Home Owner Associations (HOAs), it is crucial to review the Resale package you will get thoroughly.  By diving into these documents, you'll gain a clear understanding of your prospective community and any obligations it may impose.  Armed with this knowledge, you can confidently make an informed decision when purchasing your new home!

If you have questions or are considering buying a home and want to chat, don't hesitate to reach out.  Let's meet up for coffee and have a friendly conversation!