5 Details You Should Really Pay Attention to in HOA Contracts

Homeowner’s association (HOA) contracts are famously detailed — from outlining how high your grass should be to what color to paint your home. Most everyone knows that big problems can arise when HOA rules aren’t followed, but if you’ve already signed the contract, it can be tough (or impossible) to have much autonomy. 

I spoke to several real estate experts in various regions of the United States to find out what advice they have for first-time homebuyers when it comes to reading HOA contracts and the stipulations they should really pay attention to.

So you’ve just bought your first home — congratulations! Bret Weinstein, chief executive and cofounder of Guide Real Estate in Denver, says to check your paperwork for a status letter of HOA transfer fees to confirm how much will be owed and by which party in the transaction — the buyer or seller. 

“It’s always advisable to have an expert, CPA, or lawyer review all of the documents,” he says. “At the very least, a call to the HOA to discuss the documents is never a poor choice.” 

Weinstein also recommends that homebuyers check the HOA’s budget and budget projections, something real estate agent and market trends committee member for the Denver Metro Association of Realtors Susan Thayer says is especially important when purchasing in a condo building. Perhaps you’re entering one with an elevator that may be old and need replacing soon — or a townhome with a large pool that may need extensive work done in the future. 

“If there seems to be very little money in the account and there are a lot of units, if something large breaks, more often than not, a special assessment or an increase in your HOA dues is coming,” Weinstein says.

He also recommends reviewing the minutes of the most recent HOA board meetings to get a sense of the kind of issues they’re discussing — things like homeowner requests, assessments, and the timeline for completion of large projects. 

Even with an expert’s help, homebuyers should still carefully read through the HOA rules for themselves to understand what they’re committing to when making their purchase, says Doug Cabral, a real estate broker with Century 21 Excelsior Realty in Mattituck, New York. First, depending on the state you live in, Cabral recommends becoming familiar with the kind of rules HOAs can make in the first place. 

Further, paying attention to those rules — often referred to as the covenants, conditions and restrictions (or “CC&Rs”) — will help clarify everything from what kind of vehicles you can park in your driveway, to any pet restrictions or limits on how many pets you can own. It’ll also note if the HOA has any rules regarding rentals (short-term or long-term) in case you want to use your home as a future investment property, says Christina Ray, a real estate agent based in Denver. 

“Look to see if the CC&Rs impose any restrictions on leasing,” adds Arash Sadat, a Los Angeles-based real estate attorney at Mills, Sadat and Dowlat LLP. “The CC&Rs may require permission from HOA to rent the home, and depending on how many homes in the community are already rented, this may require you to join a waitlist.”

What are the HOA’s policies on pets? Thayer says checking on this is important for homebuyers who not only want to make sure that their beloved pet’s breed and size isn’t restricted, but also for those who may want to have backyard chickens or raise bees, for example. 

As for parking, she advises homebuyers to look for details such as rules for parking overnight on the street, any restrictions for commercial trucks or vans, and leaving your garage door open for an extended amount of time. “These questions are great for people who may have their own businesses, lots of cars, or family members with more cars than garage spaces,” she says. 

Last but certainly not least, Sadat says you should carefully read the sections of the CC&Rs relating to modifications if you plan on making any changes to the property, such as adding a deck or installing solar panels. “Some changes you want to make might not be allowed at all, while others may require approval from the HOA and/or your neighbors,” he advises. 

And while the home you’re purchasing is subject to any rules that are already in place, rule changes (and amendments to the by-laws) are not always at the sole discretion of the HOA board, providing homebuyers with some comfort in knowing that additional changes to the rules might not be made unless a certain HOA homeowner approval threshold is met, says Shaun Pappas, a Manhattan-based real estate attorney.

Still, you may be able to go to the HOA board and request a waiver for something that’s important to you, but be cautious. Pappas says he would “not advise anyone going into such a purchase to buy with the reliance on the belief that the rules can be modified for them and them alone.”