Definition
The process of examining homeowners association documents, financial records, and governing rules before purchase. These reviews reveal ongoing obligations and restrictions affecting property ownership.
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HOA reviews are critical because they reveal ongoing financial obligations and restrictions that will affect property ownership. Documents should be reviewed for special assessments, pending lawsuits, reserve fund status, and any unusual restrictions on property use. Buyers should also attend HOA meetings if possible to understand the community and governance.
Pro Tip
Ask for 2-3 years of HOA financial statements to understand fee trends and financial stability.
Example
The HOA review revealed monthly fees of $425, a pending $2 million special assessment for roof replacement, and a 6-month reserve fund that was below recommended levels.