HOA & Condo Buying Guide: What the Documents Actually Tell You

HOA and condo due diligence is where most buyers are most underprepared. The documents exist. The information is available. But buyers either skip the review entirely or receive a stack of documents with no framework for what to look for. A Nolo article tells you what CC&Rs are. An HOA management company tells you their rules are reasonable. Neither tells you which numbers actually matter, which document contains the financing red flags, or what a 28%-funded reserve study means for your wallet. This silo does.

What HOA documents should I review before buying?

Five documents in priority order: (1) reserve study — percentage funded and projected shortfalls; (2) last 2–3 years of board meeting minutes — reveals pending assessments and disputes; (3) current budget and financial statements — operating surplus/deficit and delinquency rate; (4) CC&Rs — rental restrictions, pet policy, and financing red flags; (5) master insurance declaration page — coverage type and carrier financial rating.

What is a good HOA reserve fund percentage?

70%+ funded is generally considered healthy. 50–70%: adequate but monitor for deferred projects. 30–50%: underfunded; expect fee increases or a special assessment. Under 30%: structurally underfunded; a special assessment is a matter of when, not if. Fannie Mae and Freddie Mac both require a minimum of 10% of annual budget in reserves for a building to qualify for conventional financing.

What makes a condo non-warrantable?

Fannie Mae and Freddie Mac disqualify condos where: more than 50% of units are investor-owned (non-owner-occupied), a single entity owns more than 20% of units, more than 15% of owners are 60+ days delinquent on HOA dues, pending litigation involves the HOA, or the CC&Rs include a right of first refusal that conflicts with agency guidelines. Non-warrantable condos require portfolio loans at higher rates.

What does a special assessment mean when buying a condo?

A special assessment is a one-time charge levied on all unit owners to cover expenses the reserve fund cannot absorb. It can range from a few hundred dollars to $100,000+ per unit (post-Surfside Florida buildings have seen assessments of $300K–2M per unit). An assessment that is approved but not yet collected transfers with the unit. Always ask for a 10-year special assessment history and request written confirmation of any pending or anticipated assessments before closing.