An HOA, or homeowners association, is an organization that manages a planned community or condominium. It maintains shared areas, enforces the community’s rules and collects dues from owners. Before buying, review the CC&Rs and rules, the budget and reserve study, recent meeting minutes, insurance, and any pending special assessments or litigation.
What does an HOA do?
An HOA maintains the parts of a community that owners share and enforces the rules every owner agreed to when they bought. Depending on the community, that can include:
- Landscaping, private streets, gates, pools, parks and clubhouses.
- Exterior maintenance, roofs and building insurance in many condominium and townhome projects.
- Architectural review of exterior changes such as paint, fencing, solar or additions.
- Rules on parking, pets, rentals, noise and use of amenities.
The association is run by a board of directors elected by the owners, often with a professional management company handling daily operations. Many neighborhoods in Temecula, Murrieta and Menifee have an HOA, and Canyon Lake is a gated community managed by a property owners association.
What are HOA dues and what do they cover?
HOA dues, also called assessments, are the regular payments each owner makes to fund the association’s operating costs and its reserve savings. What they cover varies widely. In one community the dues may pay only for a small common landscape area. In another they may cover water, trash, exterior insurance, roofs and extensive amenities.
When you compare homes, compare what the dues include, not just the amount. Also ask whether the property is in more than one association, since some communities have a master HOA and a sub-association with separate dues.
What HOA documents should I review before buying?
Review the governing documents and the financial records, because together they show what you can do with the property and how well the association is funded. In California, the seller of a home in an HOA is required to provide the buyer with a set of association documents, and your purchase contract gives you time to review them. The main items are:
- CC&Rs (covenants, conditions and restrictions): the recorded rules that run with the property.
- Bylaws and rules: how the association operates, plus day-to-day rules and the fine schedule.
- Budget and financial statements: where the money comes from and where it goes.
- Reserve study: an estimate of future repair and replacement costs and how much has been saved toward them.
- Meeting minutes: recent board discussions, which often reveal upcoming projects, disputes or dues increases.
- Insurance summary: what the association’s policy covers and what you must insure yourself.
- Statement of fees: current dues, any unpaid amounts, transfer fees and any approved or pending special assessments.
- Litigation disclosures: any lawsuits involving the association.
What are the warning signs in HOA documents?
The main warning signs are weak finances and rules that conflict with how you plan to use the home. Look closely if you see:
- Reserves that are low compared with the repairs the reserve study says are coming.
- Recent or proposed special assessments.
- A pattern of large dues increases.
- Pending litigation, which can also affect some loan approvals.
- Restrictions on rentals, vehicles, pets or exterior changes that matter to you.
None of these automatically rules out a property. They are reasons to ask more questions and, for legal or financial interpretation, to consult an attorney or CPA.
How do HOA rules affect what I can do with the property?
HOA rules can limit how you use, change and rent your home, and they apply to you from the day you take title. If you plan to add a pool, park an RV or work truck, keep certain animals, build an accessory unit or rent the home out, confirm in writing that the governing documents allow it before your contingency period ends. Rules differ from one association to the next, even between neighboring communities.
Frequently Asked Questions
Can HOA dues go up after I buy?
Yes. The board sets the budget each year and dues can change with the association’s costs. The governing documents and state law control how increases and special assessments are approved, so review the recent history of increases before you buy.
What is a special assessment?
A special assessment is a charge on top of regular dues, usually to pay for a major repair or an expense the reserves cannot cover. Ask whether any have been approved or are being discussed, and who will pay them if they come due during escrow.
Are HOA dues the same as Mello-Roos?
No. HOA dues are paid to the association for community upkeep. Mello-Roos is a special tax that appears on the property tax bill to pay for public infrastructure and services. A home can have one, both or neither.
Do lenders consider HOA dues when I apply for a loan?
Yes. Lenders generally count monthly HOA dues as part of your housing payment when they qualify you. For condominiums, the lender may also review the association’s finances and insurance, so share the HOA details with your loan officer early.
Questions About a Specific Community?
Aimee Ghafouri is a real estate agent based in Temecula who grew up in Murrieta and works with buyers, sellers and investors across the Temecula Valley and southwest Riverside County.
Aimee Ghafouri, 951 Properties, CAL DRE #02193341. This page is general information, not legal, tax or financial advice. Equal Housing Opportunity.
