Article by – Vanessa Martin
The Need for Comprehensive Due Diligence
If you’re thinking about buying an investment property and you find one in an HOA community, it’s crucial to do thorough research. Not doing so could lead to unexpected costs, and as the buyer, it’s your responsibility to avoid this. Conducting research involves more than just checking the property’s age or condition.
Utilizing the HOA Estoppel for Financial Clarity
You also need to check the annual fees and the seller’s payment status. To get this information, you should order an HOA Estoppel, which is a legally binding document. It tells you about any and all fees owed and what has been paid up to the date of purchase. The estoppel letter certifies the current homeowner’s outstanding fees to the HOA, including liens, unresolved fees, and other charges. It also tells you if the association has passed a special assessment due at or after closing.
Understanding Special Assessments in HOA Communities
A special assessment is a one-time fee to cover additional costs, which the association may ask for. Some HOAs plan ahead for normal expenses, but others do not prepare for large-scale repairs, such as replacing siding, private roads, roofing, or repairing or renovating community amenities, or adding new amenities, such as a tennis court or swimming pool.
Property Compliance and Hidden Costs
The document may also identify any compliance issues regarding the property that you should be aware of. In conclusion, buying in an HOA community or condo association may have some added expenses beyond the monthly or upfront costs.