Buying into a Homeowner Association: What You Need to Know
By Charissa Jones
Homeowner associations (HOAs) vary in size and style, but every one of them is established to maintain the integrity of a community and allow it to thrive. Owners set standards, contribute fees and appoint a board of owners to oversee the upkeep of common property and enforce HOA standards.
So, what should you look for when buying into an HOA? While all the records and governing documents are important, typically it’s the combination of meeting minutes and covenants, conditions and restrictions (CC&Rs) that should be the main focus of your research.
To help get you started, here are the two main types of HOA documents you’ll want to review:
These documents dictate how a community is structured, as well as the rules its owners are expected to follow. Governing documents include:
- Articles of Association or Articles of Incorporation: The articles create the legal entity. This sets the HOA name and initial contact person. The articles might also outline some procedures as a precursor to the bylaws. And speaking of …
- Bylaws: Bylaws describe the mechanics of HOA management. Honestly, it’s a little boring to read through but absolutely necessary if you join the board or find yourself in conflict with the HOA. Bylaws detail notification and voting procedures and describe record-keeping procedures as well as the roles of directors.
- Declaration of CC&Rs: The covenants, conditions and restrictions set out the expectations on owners, residents and their guests. The CC&Rs get filed with the state of Georgia, while the board will enforce common rules approved by owners.
Records: Financial, Meeting Minutes & Reserve Studies
Your HOA also keeps financial records (statements and budgets), plus minutes from board meetings and annual general meetings (AGMs). Finally, your HOA will fund reserve studies (also known as reserve reports) on common assets. Let’s break down those facts of an HOA, too:
- Financial records: Annual financial statements should be audited; interim statements, which may be prepared monthly or quarterly, will not. Budgets are meant to provide a clear indication to owners about how their dues will be spent.
- Minutes: Whenever the board meets, minutes should be kept in accordance with the bylaws. Minutes describe who was present, what was discussed, and outcomes. The larger annual general meeting (AGM) is open to all owners. AGMs cover the budget, state of financial affairs, procedural matters, and other owner concerns. Search through minutes and you’ll discover the most current, relevant issues about the health and harmony of the HOA. A definite must-read!
- Reserve studies: A reserve study sets out the expected life and replacement cost of key common assets. This could include roads, gates, parking, clubhouses, tennis courts and pools. If you live in a condo, assets like elevators, gym, HVAC units, and the building envelope (roof/siding/windows) would also be covered. Don’t underestimate the value of investing in infrastructure. If your HOA is fully funding the repair and replacement of capital items, it reduces the likelihood of a special assessment.
HOA governing documents may seem a little dull but they’re important for anyone thinking about living in an HOA community. If you’re are an owner or plan on buying into an HOA in the CSRA, Eli Report will provide you with an instant summary, free of charge.
And after you review your report, you can contact me at (706) 631-2422 or email@example.com. I’d be more than happy to find the perfect HOA community for you!