What HOA Documents Are Involved with the Purchase of a Townhome?

What HOA Documents Are Involved with the Purchase of a Townhome?

When you’re buying a townhome, you’re not just investing in a piece of property. You’re also buying into a community that operates under a set of rules governed by a homeowners association (HOA). For those unfamiliar, an HOA is essentially a group of people living in the neighborhood who oversee community standards, property maintenance, and sometimes even dispute resolution. If you decide to buy a townhome, you’ll become a part of this association with the option to get involved on the board—possibly even as president or treasurer.

But before you even get to that point, there’s a critical step in the buying process: reviewing the HOA documents. These documents are essential because they outline the rules, regulations, and financial health of the association. As a buyer, you have the right to thoroughly review these documents, and it’s a contingency that can allow you to back out of the sale if you find something concerning. I’ve had buyers back out of sales for a variety of reasons, some valid and others quirky—like realizing they couldn’t legally set up a dog kennel in the backyard.

To help you understand what to expect, here are the key HOA documents you’ll receive during your townhome purchase:

1. Resale Disclosure Certificate

This is one of the last pieces of documentation you’ll receive, usually because it’s provided by the management company at a cost. This certificate is essentially an acknowledgment that you’ve received all the HOA documents, reviewed them, and agree to abide by the HOA rules and pay any associated fees. Think of it as the official “I’m on board” statement from you, the buyer.

2. Declaration of the Association

This document outlines the structure of the HOA board, listing the president, vice president, treasurer, and any other board members. It may also include details about how new members can join the board or take part in decision-making, giving you a chance to know who’s in charge and how you could get involved.

3. Amendments and Supplemental Declarations

These documents detail any updates or changes to the original declaration since its creation. Over time, an HOA may adjust rules or clarify certain policies. As a new buyer, you’re entitled to all these updates to ensure you’re aware of any recent changes that could affect your ownership experience.

4. Articles of Incorporation

The Articles of Incorporation are filed with the state, formally establishing the HOA as a corporation. These documents confirm that the HOA is a legally recognized entity in good standing with the state and list the registered agent, verifying that the HOA is operating within legal boundaries.

5. Bylaws of the Association

The bylaws govern the operational aspects of the HOA—when meetings are held, how board members are elected, and other administrative procedures. These details ensure transparency, and the bylaws themselves must align with both state law and the association’s declaration.

6. Rules and Regulations

This is often the most scrutinized document, as it includes all the community-specific rules and guidelines. Want to know if you can have pets, rent out your unit, or place a grill on your balcony? This document will clarify all such questions. While I’m here to help, it’s vital that you read this section carefully and confirm all details for yourself, as I may not be familiar with every rule. If you have questions, I can assist by reaching out to the HOA or management company on your behalf.

7. Projected Annual Budget

Typically included with the resale disclosure certificate, the budget outlines the association’s financial health. It lists out current charges, the association’s savings, and a detailed breakdown of your monthly HOA fee. This transparency is critical, as it lets you know exactly where your money is going and how well-funded the association is for future maintenance needs.

8. Master Insurance Policy

Finally, the master insurance policy proves that the association has insurance coverage. This policy also specifies the deductible amount, which you would be responsible for if, for instance, a fire or other disaster destroyed your unit. Many buyers also add this deductible to their renter’s insurance policy, which covers the interior and personal belongings, offering added protection against unexpected out-of-pocket expenses.

Each state may have slightly different requirements, so your document package could vary. Here in Minnesota, these are the core HOA documents I see for townhomes and condos. While reviewing these details may not be as thrilling as choosing paint colors or imagining your new furniture layout, it’s a crucial part of ensuring your purchase meets your needs and expectations. I strongly advise dedicating the time to thoroughly read through all these documents. If any questions arise, I’m here to support you and help you get the answers you need.

Buying a townhome doesn’t need to be a complicated process, and I’m here to help every step of the way. Ready to dive into your HOA documents or start the home-buying process? Reach out to me, and let’s get started!

#townhomebuying, #HOAdocuments, #HOAguidelines, #MinnesotaRealEstate, #Homeownership, #HOApurchaseprocess, #homebuyingtips, #townhomeliving, #realestatehelp, #TomSommersRealEstate