Be Nice To Your HOA


If you are financing the purchase of a condominium unit, you are going to need help from the homeowners’ association (HOA). A property management company is often hired to manage the affairs of the complex, but the HOA is ultimately responsible for many things – including:

  • Building structure, machinery and equipment (roof, HVAC, security, electrical/mechanical)
  • Common areas (lobby, pool, work-out facilities, BBQ area, landscaping)
  • Other functions (insurance, accounting, budgeting, approving leases, collecting HOA fees)

Your lender will require a detailed project review whenever your down payment is less than 20%, or if your condo will be a rental property. This means the HOA will likely need to provide you with several documents (e.g., bylaws, financials, master insurance certificates) and complete a condo questionnaire to confirm that:

  • There is no existing or pending litigation
  • Sufficient reserves exist in the repairs and maintenance budget
  • The condo does not have short-term “hotel-type” rentals
  • No more than 15% of the owners are delinquent in their association fees
  • One owner does not own more than 10% of the units

The questionnaire takes time to complete, and so the HOA may charge you a fee for doing so. But in the end, knowing everything about your purchase will protect you from unforeseen events – including special assessments for which you may be responsible right after your purchase.

In addition, the HOA’s insurance agent will need to provide you with written evidence that the condo master property and liability insurance also applies specifically to your unit being purchased.

Here’s the Point: When you purchase or refinance a condo, there are several reasons why you will want the homeowners’ association on your side.

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