Ten questions to ask before buying a home in a covenant community

I was asked this afternoon by the editor of the local newspaper to write a guest column on the challenges facing homeowners associations during tough economic times. As a sidebar I want to include a list of ten questions that every prospective purchaser should ask before buying into a covenant community. And I thought that this would be the ideal place to seek suggestions. (This is a serious request. Please, frivolous or tongue-in-cheek responses, thank you.)

I don't want to include the standard factual answer questions (e.g. "How much are the annual dues?). Rather I want to include ten questions that require a thoughtful answer from the seller, the Realtor or the association board/management company.

An example might be, "Please describe the ways in which this community differs from other nearby covenant communities?" And, "If I were to confidentially interview five residents/owners, what do you think they would tell me about the quality of life in the neighborhood and the value they receive for the association fees which they pay?"

Let me (and everyone else) have the value of your thinking. There are no guarantees that it will be used, nor even a guarantee that the column will be published (although it may be used as a blog entry.

I don't have ten but here are a couple of suggestions:

If they're not experienced home buyers then they should pay an attorney to walk them through it and explain their rights and obligations.

They should ask for a copy of the CC&R's and read them to see if the Covenants and Rules are something they can live with and abide by. You might also mention not to rely on the sellers or agents assurance that they never enforce X. If it's in the documents then chances are it can be enforced and a new BOD just might.

Financials, including the reserves, the amount of delinquencies and any special assessments or pending SA's.

Visit the local police department and find out if there are any ongoing problems with the neighborhood. Drive through the community on different days and hours. What might be the model of idyllic peace and quiet during the week may turn into party central on the weekends or be filled with screaming kids.

Go online to the County Court's website and see if the HOA is involved in any litigation or if there is a pattern of lawsuits with the HOA.

The old "You can lead a horse to water but you can't make it think", I know it is required in Florida, IMO it is one law that should be nationwide.

George - I cn hardly wait to see your column.

You don't say if you are speaking about condos, detached condos, townhouse, or private subdivision, but it doesn't really matter.

I would ask if they know how to get in contact with the HOA and if they have seen or have access to web site, newsletter or other communication.

Seeing financials, especially the Reserve Fund would be a must for me.

My first question a prospective buyer should ask:

Ask yourself how much you know about associations. If you can't answer that with some confidence, you can't qualify for even considering the purchase of property. Hard fact, but the best way to go. You (the buyer) must have the knowledge that allows you to put the association on a higher plane than just paying your dues, and expecting someone to take care of you. You must make this commitment.

Second: Does my partner fell the same way and do we have equal knowledge? If not, you must level the field, if you don't you are due for a rough ride.

Third: Talk to Board members and residents..............ask questions, ask questions and ask questions and don't buy the Party Real Estate line, ask enough questions until you begin to see troubles, and each association has them. Find out enough to pick a side and be ready to right the wrongs. Picking the wrong side is no sin, when you know better, make corrections but get involved.

Certainly not everyone's choice but surely all this is important.

Here are one person's suggestions:

1. Has this home or unit been the subject of any CCR violations? May I have a copy of all approved ACRs pertaining to this unit? (This way you won’t be blindsided by a nastygram requiring that YOU fix something you didn’t install –and you’ll know in advance that a flowerbed in front of your property is your responsibility to maintain)

2. What areas of my home (if any) are covered by the association’s master insurance policy? (e.g. if you’re responsible for the insurance deductible if damages originate inside your unit, you need to know what to put in your liability coverage)

3. What are your rules regarding renting out your home or condo? (this is a hot topic all over this message board – may as well find out now if there’s a hardship clause)

I know you didn't want the "how much are fees" question, but I do think the following are important:

4. How much might the fees increase from this year to next (e.g. can the board increase fees up to a certain percentage, say, 5%) And may I have a list of fees from the last five years?

5. What services and amenities are covered by assessments and how often must I pay them (annually, monthly, quarterly)?

6. Have there been any special assessments during the last five years? If so, what did they pay for? Are there any special assessments on the horizon for the next year or two? If so, what will THEY pay for? And what is the Association doing to avoid special assessments in the future?

Aside from paying dues and following the HOA rules, will anything else be required or expected from me?

You expect to get an honest answer from any of those 3 people? LOL. First of all, the Realtor doesn't have a clue, don't believe anything they say. First and foremost, they are a salesperson and will say anything you want to hear to make the sale. The association will proubably not tell you anything negative. The management company might not say anything at all, they would fear loosing the account.

Best bet? Talk to other homeowners / condo owners.

Careful people.

Please study your proposed questions very carefully.

Wouldn't want to give "George" uninformed opinions that would wreak utter havoc somewhere.

All are great questions, but I think that Steven is right. The Realtor won't know the answers and the PM isn't allowed to give many of them.

If documents are requested by the buyer that I can't turn over, I let them know that only the owner can obtain that info. You'd be surprised how infrequently the owner will make the request.