When purchasing a new home, you must thoroughly review the Homeowners Association (HOA) documents. These documents will inform you of the community’s rules, regulations, and financial health and help you make an informed decision.
It is helpful to understand what information you should be looking for when reviewing the HOA documents.
Covenants, conditions, and restrictions (CC&Rs)
CC&Rs are the rules and regulations that govern the community. These documents can cover several topics, from architectural guidelines to pet policies. Understanding these rules can help you to know what you can and cannot do with your real estate property. Ensure that you are comfortable with these restrictions before committing to the purchase.
Financial health
Review the HOA’s financial statements, including the budget, balance sheet, and reserve fund. A healthy reserve fund is necessary for covering repairs and unexpected expenses. Also, check for any outstanding debts or financial issues indicating poor financial management.
Fees and assessments
Understand the monthly or annual HOA fees. These fees fund community maintenance, amenities, and services. Additionally, inquire about any recent or upcoming special assessments. These may be extra charges to cover large projects or repairs.
Meeting minutes
Reading the minutes from recent HOA meetings can provide insight into the community’s current issues, projects, and atmosphere. This can help you gauge the level of involvement and satisfaction among residents.
Insurance
Ensure the HOA has adequate insurance coverage for common areas and amenities. This protects homeowners from potential liability and ensures the community can recover from major damage or disasters without excessive costs.
Knowing the community’s rules, financial health, and governance practices in Maryland will help ensure your new home meets your expectations.