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7 Questions To Ask Before You Commit To An HOA (#5 Could Help You Save Big)

You have required reading before putting in an offer.

By Heather Bien

Edited by Laura Ratliff

Updated Dec. 17, 2024

If you’re considering buying into a community with a homeowners association (HOA), stop what you’re doing and make sure you have access to its rules and bylaws.

As HOA communities become more commonplace, people often glaze over these documents, assuming they are just fine print and legalese. But what’s in these documents could greatly impact your day-to-day life if you buy into an HOA community.

Financial and lifestyle implications will emerge as you review governing documents, assess the community's current financial health, and clarify the HOA's financial responsibilities regarding upkeep and maintenance compared to individual homeowners.

You should also do some detective work on your own, looking into whether the HOA has a history of lawsuits and whether this particular community has a known reputation in your area.

If you’re considering a home in an HOA, prioritize smart homeowner moves in the process. Here are the questions you should ask to save yourself major money potentially.

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What is the current financial health of the HOA?

If an HOA has healthy reserves, there’s a better chance that you won’t have significant assessments soon, even in the case of an unexpected maintenance issue. But, if the HOA is not responsibly handling their reserves, that’s critical information you must have.

That could mean the monthly dues will increase significantly, or a one-time special assessment will be added. It’s not necessarily a deal breaker, but you need to understand the total financial picture before you make an offer.

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Are there any pending or past lawsuits involving the HOA?

Anyone can file a lawsuit, which is why a pending or past lawsuit against an HOA isn’t always a red flag. It could be a disgruntled homeowner—but it also could be an issue with the HOA.

Look into any lawsuits that have involved the HOA. Make your own decisions about who was in the wrong and who was in the right, but if it looks like the homeowners have a reasonable case against the HOA, consider that your warning.

What is included in the monthly HOA fees?

If you buy into an HOA community expecting that everything from your trash to your power washing is covered, you might be disappointed when you realize the only thing that’s included is landscaping — and you’re going to have much higher bills than you thought.

That’s why it’s so important to carefully look at the HOA fees and factor that into your understanding of the cost of living in that community.

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Are there any restrictions on property use or modifications?

The HOA may have strict regulations about using or modifying your property. This could cost you money in multiple ways.

If you’d planned on running a business out of your property and now you can’t, you’ll spend more when you have to get an office elsewhere.

If you modify your property that isn’t in line with HOA regulations, you could pay a fine. Not understanding the restrictions up front could cost you money later.

What is the HOA's policy on fee increases or special assessments?

Some HOAs have policies regarding fee increases and special assessments that prohibit the board from making these decisions without first approving them with homeowners. Others can pass on these costs with a board vote.

Make sure you have full transparency regarding the HOA’s ability to request money, or you could end up spending significantly more than you originally planned.

Does the HOA allow rentals?

If part of your investment strategy includes renting your home out after you’ve moved on to your next chapter, you might find yourself in the red when you realize your HOA doesn’t allow rentals.

Make sure you ask about the HOA’s stipulations regarding rentals and whether it’s a percentage of the total units that can be rented out at any time.

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How are construction decisions made?

Do you trust the board to make fiscally responsible decisions in the event of a major repair or renovation? Do you want a say in how construction and renovation decisions are made?

Make sure to ask who determines the logistical and financial side of these decisions — if it’s in the wrong hands, it could cost you significant funds.

Bottom line

Buying into an HOA community can serve as a way to protect your wealth. Often, these communities create rules to ensure the entire community adheres to standards that help the property maintain its value.

If the units around you are impeccably maintained, they’re worth more. And if they’re worth more, your home is worth more, too. It can be a win-win if you fully understand what you’re signing up for.

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