Under terms established by covenants (agreements) that were recorded when a neighborhood or condo complex was first built, a home owners association (HOA) may have powers to set rules for the neighborhood, control alterations to homes or landscaping, and assess fees to maintain the neighborhood and/or the buildings. We you buy a home under the jurisdiction of an HOA, you’re effectively buying into a corporation which may have rules you’re not comfortable with and which may have debts that you’re assuming part of. We’ll routinely obtain the minutes of HOA meetings, the financial statements of the HOA, and the rule,
A4HB Homebuyer's Blog
We consistently recommend a video scoping of the main sewer line going out of the house to make sure it is draining properly and a test of the radon (radioactive gas) levels in the home. We also heavily push for a meth screening. In the state of Colorado a house can be considered a meth lab if someone has smoked in the house only a few times. To clean the house of meth it can be $20k-100k. That is a bill that you do not want to get stuck with! If the home is on a well and septic system,
In addition to recorded covenants, most town home or condominium associations have unrecorded rules and regulations that you will have to live with. You need to review these and make sure you are comfortable with them. It is also a good idea to review the minutes of recent association meetings to familiarize yourself with the issues that are of concern to current owners in the complex.
The unit that you are buying may be immaculate, but if the complex as a whole is poorly cared for you may have a very difficult time selling. In most cases, if you see that the complex has not been well maintained, you will find that the financial status of the association is less than ideal.
Larger condo complexes in our area typically have professional management. They will have detailed budgets and projections for future repairs and maintenance. Smaller associations may be managed by one of the owners in the complex, the landscaping may be taken care of by the owners, and the owners may routinely deal with major repairs by requiring everyone to kick in $500 to cover costs. You need to know what the management style of the association is and make sure that you’re comfortable with it.
If the association needs to replace the roofing or resurface the parking lots, or build a new road or water system, they will need money to cover the costs. If they don’t have the money in their reserve accounts, they will either have to assess every owner for a portion of the costs or they will have to borrow the money and raise association fees for owners to cover the loan payments. If they are going to assess you $1,000 in excess of normal association fees, you need to take this into account. And if they raise association fees above
Have the home professionally inspected just as you would with a resale home (see Home Inspectors). Most people do not have new homes professionally inspected, relying on the builder’s construction supervisor and the city or county inspector to assure them that their home is done right. This is a mistake. Even with the best builders, professional inspectors routinely find significant construction defects. We’ve found new homes where a bathtub drain was not connected, where heating ducts were not connected, where ceiling insulation had not been installed, where soffits and siding were not installed, and where floor joists had been sawed
You should insist that the contract allows you to obtain an “owners extended coverage” or “plain language” title insurance policy with mechanics lien protection, whether you pay for this coverage or the builder does. If material suppliers and subcontractors who helped build the home do not get paid by the contractor, they can record liens on your home and you may have to pay them. Unless you want to pay for your house twice, transfer this responsibility to the title company through an “extended coverage” policy. If the title company refuses to provide this type of policy, they may have
If you want to have an attorney assist you with the closing, you need to arrange this with your attorney at least a week or two in advance. Attorneys are not common at the closing table in residential sales in Colorado, but if you want an attorney they will need time to review the contract, the title commitment and other documents prior to closing. They will also generally want to review some of the important loan documents before they get to the closing table.
In any transaction where a loan is involved, the buyer will have to sign a deep stack of papers at the closing table. Most of these documents are disclosures to the buyer, but many have significant legal implications. If you are concerned about the documents you will be signing, you should get copies prior to the closing and review them, or have them reviewed by your attorney. We generally recommend that our clients get a copy of the Note and the Deed of Trust prior to closing (see Key Documents). These documents record the terms of the loan agreement and