HOA resale package: what to check before you close

A home in an HOA or condominium association comes with a second set of costs and rules that your inspection will never find. The association can raise dues, charge a one-time assessment for a new roof, restrict renting the home out, and put a lien on it if the seller's dues weren't paid. All of that is in the documents. Most buyers skim them. This guide is a practical order for reading them.

What's in the package

The names vary by state and by management company, and so does what the law requires. Expect some or all of these:

• Resale certificate, disclosure statement or estoppel letter. A summary for this one home: the regular assessment and how often it is billed, whether it is paid up, any unpaid balance or late fees, special assessments approved or pending, transfer and capital contribution fees, and often a note on lawsuits, violations and insurance.
• Budget and financial statements. The current operating budget, the latest year-end statements, and the reserve balance.
• Reserve study. An engineer's or specialist's forecast of what the common property will cost to replace, and the savings plan to cover it.
• Governing documents. The declaration (CC&Rs), bylaws, and rules and regulations.
• Board and annual meeting minutes. Usually the last 6 to 12 months.
• Insurance certificate or summary for the association's master policy.

Some states set a deadline for the association to deliver the package. California, for example, sets 10 days from the request (Civil Code section 4530). Some states also give the buyer a short window to cancel after receiving it. Others give none. Ask for the package the day the contract is signed, and find out exactly when your window closes.

If the seller sends you only the certificate, ask for the rest. The certificate is the summary. The problems are usually in the detail.

1. Dues and one-time fees

Start with what you will pay.

• Regular assessment. The amount, how often it is billed, and what it covers (water, trash, exterior insurance, landscaping, a pool, a gate). Two communities with the same dues can include very different things.
• Trend. Compare the current budget with last year's. A community that raised dues sharply, or that has not raised them in years, is telling you something. Years of flat dues often come before a large catch-up increase.
• Other associations. Some communities sit under a master association as well as a sub-association, each with its own dues.
• One-time charges at sale. Transfer fees, capital contributions or working capital deposits (often a few months of dues), move-in fees, and the fee for the resale package itself. Find out who pays each one: the contract may say, or local custom may.
• Unpaid balance. Any amount the seller owes. In many states an unpaid assessment can become a lien that follows the home, so get it paid or credited at closing.

2. The reserve fund

Reserves are the association's savings for big replacements: roofs, paving, siding, elevators, pools. A thin reserve is the most common reason a special assessment arrives.

• Percent funded. The reserve study states how much of the ideal reserve balance the association actually has. A common rule of thumb from reserve study firms treats under 30 percent as weak (a high risk of special assessments), 30 to 70 percent as fair, and over 70 percent as strong (Association Reserves). It is a guide, not a guarantee: a high number in a community with a failing roof still matters.
• Age of the study. Check the date and whether a specialist visited the property. An old study may not reflect today's costs.
• The funding plan. Compare the contribution the study recommends with what the budget sets aside. If the board funds less than the study asks, ask why.
• Components coming due. Find the items with the shortest remaining life and the biggest cost. A roof due in two years and a reserve that can't cover it points to an assessment.
• No study at all. That is a finding in itself. Ask how the association plans for major repairs.

3. Special assessments

A special assessment is a one-time charge on top of regular dues, usually to pay for a repair the reserves can't cover. Look for them in three places:

1. Levied. Already approved. The certificate should state the total, your share, the installments and who pays what is still owing. Make sure the contract says who pays the balance.
2. Proposed or under discussion. This is where the minutes matter. Board talk of a "capital campaign", a roof bid, an engineering report, or a loan to fund repairs often comes months before a vote.
3. Allowed without a vote. Some governing documents let the board levy a limited assessment without an owner vote. Find the cap.

Our guide on special assessments goes through how they are levied, who pays them at closing, and the warning signs.

4. Litigation and disputes

Read the certificate's litigation section and then the minutes. Look for lawsuits by or against the association, construction defect claims against a builder, arbitration, and legal fees in the financial statements. A lawsuit can mean legal costs that become assessments, a settlement that is not enough to fix the problem, or a lender that declines to finance the building. If there is a claim, ask what it is about, what the association expects it to cost, and whether insurance covers it.

5. Insurance

The association's master policy covers the shared structure, and you cover the rest. Read the certificate for:

• What the master policy covers. In a condominium, find out whether it covers the walls and fixtures inside your unit or only the bare walls. This decides what your own policy (an HO-6 for condos) has to cover.
• Deductibles. A large deductible, especially a percentage deductible for wind, hail or earthquake, is passed to owners after a loss through an assessment.
• Limits and expiry. Is the policy current, and is the coverage amount in line with the replacement cost of the buildings?
• Other cover. Liability, directors and officers, and fidelity (employee theft) insurance protect the association's money.

Ask your own insurance agent to read the certificate before you close. Premium increases in some regions have been large enough to push dues up.

6. Rules that limit how you use the home

The CC&Rs and rules decide what you can do with the home. Read these for the things you plan to do:

• Renting it out. Look for rental caps, minimum lease terms, waiting periods before you may rent, owner-occupancy requirements, and bans on short-term rentals. If you may rent later, a cap with a waiting list can make that impossible.
• Pets. Number, size, breed and weight limits.
• Parking and vehicles. Garage use, guest parking, trucks, RVs, boats.
• Renovations and exterior changes. Architectural approval, paint colors, fences, solar panels, flooring in condos.
• Fines and enforcement. What the board can fine, and whether the association can place a lien and foreclose for unpaid assessments.
• Violations on file for this home. Ask for any open notices and make sure the seller clears them.

7. Delinquency and other red flags

The financial statements usually show assessments owed and bad debt. A large share of owners behind on dues means the owners who do pay will carry the shortfall. It also affects financing: lenders set limits on delinquency, and Fannie Mae's, for example, rule out a condominium project when more than 15 percent of the units are 60 days or more past due on assessments (Fannie Mae Selling Guide B4-2.2-02). Rules change, so ask your lender what they require.

Other signs to look for in the package:

• Missing financial statements, no annual audit or review, or a budget the owners did not approve.
• A high share of rented homes or investor-owned units, which can limit loan options.
• The developer still controlling the board.
• Frequent turnover of managers and board members.
• Meeting minutes that describe repeated complaints about the same repair.

Questions to ask the HOA or seller

Write down answers and ask for them in writing:

1. Are any special assessments approved, proposed or being discussed? What is the total and what is this home's share?
2. When was the reserve study last updated, and what is the percent funded?
3. Does the budget fund the reserve contribution the study recommends?
4. What major projects are planned in the next five years, and how will they be paid for?
5. Is the association involved in any lawsuit, arbitration or claim?
6. What are the master policy's deductibles, and what does it cover inside the unit?
7. What percentage of owners are more than 60 days behind on assessments?
8. Can I rent the home, including short term, and are there caps or waiting periods?
9. Are there any open violations or unpaid balances on this home?
10. What fees are due at closing, and who pays each?

A reading order that saves time

If you have an hour:

1. The certificate: fees, balance, pending assessments, lawsuits.
2. The reserve study summary: percent funded, funding plan, components due soon.
3. The most recent meeting minutes: look for repairs, assessments, lawsuits, insurance.
4. The rules and CC&Rs: rentals, pets, parking, renovations, assessment powers.
5. The insurance certificate: deductibles and coverage.
6. The financial statements: reserve balance, delinquent assessments, legal fees.

This order puts the findings that cost you money first.

Sources

• California Civil Code, section 4530 (delivery of HOA disclosure documents)
• Association Reserves, Reserve Studies 102 (2025) (percent funded ranges)
• Fannie Mae, Selling Guide B4-2.2-02, Full review process (delinquency limit for condominium projects)

This guide is general information, not legal or financial advice. HOA disclosure rules and a buyer's rights to review and cancel differ by state: ask your real estate attorney or agent about yours.

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