Buying Into an HOA? Check These Deed and Property Research Tips

Common interest communities, also known as homeowner associations or HOAs, can be condominium properties, subdivisions, and planned developments. Some have buildings with multi-unit homes. Some are made up of freestanding houses.

Many buyers look to acquire deeds to HOA units, rather than whole properties, because of the relative affordability of condos. Others downsize to condos. Some simply prefer to buy into HOAs, because of the amenities, conveniences, and reputation of a particular property.

But all buyers need to know what the deeds and rules say before making their purchases. They need to be aware of how parking, holiday décor, guest visits, and a whole lot more has to be handled. So, if you’re thinking about buying a unit in an HOA, it’s best to review the governing documents carefully before signing a contract. The rules in those documents are detailed and complicated, often reflecting several generations of HOA board decisions.

A professional real estate agent typically gathers all of the necessary documents for a buyer. And at closing, the buyer receives a copy of the master deed, and a notebook containing bylaws and the covenants, conditions, and restrictions.

Let’s look more at what these documents are about, so you know what to expect in advance.

Get to Know the Master Deed

The master deed dates back to the development of the property as an association. It conforms to the state’s laws on condominiums and/or community associations.

You’ll get a different, individual deed. It will be the deed to a single unit. The master deed allocates expenses throughout the individual units. Allocation is often based on a unit’s size or number of bedrooms.

The whole property (defined by the master deed) and the specific unit (interior) are insured separately. The individual buyer needs to get a policy for the unit’s interior.

Basically, the condo buyer should get coverage for what the condo board is not covering for the property as a whole. Speak to the manager and to your insurer for more information. For example, you might need coverage for sewer problems to augment what the master insurance policy covers.

The master deed is on file at the local deed recorder’s office. So is the map showing the boundaries of each unit. 

In short, unit owners get deeds to their units. Then they share financial responsibility for certain services like waste pickup, tree work, snow removal, and maintenance of the common areas. The areas shared in common by all unit owners are held by the property under the master deed.

Guidelines for Daily Life: The Covenants, Conditions & Restrictions (CC&Rs)

These, along with deeds, are on file at the county deed recorder’s office. Typical restrictions to the allowable use of the unit involve rules against nuisances, outdoor décor, gardening and painting rules, pet rules, and caps on the number of investor-owners.

As a buyer, you’ll want to study the CC&Rs to learn about the distinctions between what you’ll own, and what you’ll share with the other owners. Typically:

• It’s up to the buyer to maintain all interior objects and features of the unit. 
• Any alterations that could impact the integrity of the building must be approved with the management office.
• Patios, balconies, front doors, shutters, plumbing and electric systems are partly individual, and partly common elements; the association and unit owner might split the cost or work of upkeep.

Be sure to understand the normal monthly unit dues (assessments) as well as potential special assessments that you’ll be charged by the homeowners’ association. A special assessment is a charge to all owners that the board votes to impose. It generally involves a major repair or upgrade, above and beyond what was planned through the normal budgeting process.

Learn about whether deed holders to units are free to work in their condos, on Deeds.com.

Consumer Laws and HOA Research

States have consumer laws that help buyers understand what they’re getting and whether they’re OK with what they get. For instance, the Delaware Uniform Common Interest Ownership Act says buyers have up to 15 days after receiving governing documents and a public offering statement to cancel the purchase. (Of course, buyers can work with their agents to make purchase offers contingent on their specific expectations, too.)

States direct HOAs to file their governing documents with the county in which these properties exist.

Some counties work with their states to offer public, online access to governing documents for HOA communities. Counties sometimes have portals where you may get familiar with the bylaws, CCRs, and subdivision plans without needing legal expertise.

For instance, the office of the New Castle County recorder of deeds maintains a Community Association Portal. The website resulted from a collaboration between the Delaware DOJ and the local Department of Land Use. It has user-friendly search tools lets community associations post updated documents. Other counties are following suit and going online. But after a data breach in 2023, the Kent County, Delaware recorder of deeds stopped offering this feature.

To find out if an HOA’s county in any state has a portal for researching HOA documents, visit the local recorder of deeds website by searching “recorder of deeds” and the name of the county.

HOA unit buyers subject themselves to legally binding rules. If an owner fails to comply, the unit itself may incur penalties, including liens for unpaid fines. If the HOA files a lien on a unit’s title, that unit cannot be sold until the debt is resolved.

HOA Research Checklist

Avoid surprises, and potential regret. Check these steps off your due diligence list:

• Look up and examine the HOA master deed.

• Look at the budget and financial reports with a special focus on the HOA’s capital reserve funds. Ask about the projected, long-term capital needs. (As your mortgage consultant might tell you, you’ll want to avoid the surprise of a big special assessment because of poor savings on the part of a board.)

• Get a copy of the CC&Rs in advance and read through it. And ask to see the bylaws. These tell you how a unit owner is expected to interact with a specific condo association’s board and management.

• If you may wish to rent out your condo, ask about the limitations.

• Check minutes of meetings (these, plus a monthly newsletter for residents, might be online at the HOA website). Get a feel for the professionalism and openness. Optimally for the buyer, monthly meetings are open to all residents.

• Pay attention to gardening and landscaping rules if you have chemical sensitivities or hope to garden around the unit you’re thinking of buying.

• Talk with other owners about their impression of the board and management, and read the online reviews, social media, etc. Don’t neglect the value of having a conversation with the seller of the specific condo you might buy. Ask about all of the above points.

Once you’ve been diligent, life still happens. Boards change. Managers may come and go. Will the monthly assessments go up? You can bet on it; they normally do.