What to look for in HOA documents

What to look for in Utah HOA documents is a short list: an association packet runs to sixty pages and about five of them matter.

Somebody thanked me recently for reading a whole packet and finding the one line that mattered. That is genuinely the job, not reading sixty pages to you, but knowing which five to read first and what you are looking for on them.

Here is that list, so you can do it yourself.

One: the budget and the reserve study

The single most important document and the one buyers most often skip.

A reserve study is the association’s assessment of what its shared components will cost to replace and when, roofs, private roads, the pool, the clubhouse, and how much money it has set aside toward that.

An underfunded reserve is a future special assessment wearing a low monthly fee. That is the whole reason this document matters. Dues that look attractive today can mean an association that has not been collecting enough, and the bill arrives as a lump sum years later, often to whoever owns the unit when the roof fails.

Look for: what the study says the reserve should hold, what it actually holds, and when it was last updated. A study from a decade ago is a guess.

Two: the minutes from recent meetings

Where you learn what the community actually argues about.

The governing documents tell you the rules. The minutes tell you whether anyone follows them, what is breaking, who is unhappy, and what is being discussed that has not yet become a decision.

Read the last year. If there is a dues increase coming, a lawsuit brewing or a repair everyone is avoiding, it is in here before it is anywhere else.

Three: pending special assessments or litigation

Ask for this directly and in writing, because it may not be in the packet.

A special assessment already approved is a known cost you are inheriting. One under discussion is a risk. Litigation involving the association can affect financing as well as your wallet. Some lenders will not lend into a community with active litigation.

Four: the rental restrictions

Matters even if you have no intention of renting.

Many associations cap the percentage of units that can be rented, and some require an owner to live there a period before renting at all. That affects you twice: it limits what you can do later, and if the cap is already reached it affects who can buy from you.

Whether to rent out a Herriman house instead of selling it covers that decision, and the association rules decide whether it is even available to you. For nightly rentals the answer is almost always no, and city rules sit on top, whether short-term rentals are allowed in St. George covers how specific that gets.

Five: the rules you will actually live with

Parking, vehicles, exteriors, pets, landscaping.

This is where day-to-day friction lives. Can you park a truck on the street. Is there an RV rule. What color can the door be. How many pets, and what size. Can you put up a shed.

Whether you can park an RV in your driveway in Herriman is the local version of one of these, and the answer depends on both the city and the association.

What the association cannot do

Worth knowing so you read the rules with the right expectations.

Utah law sets a floor that an association’s own documents cannot override. What Utah’s association laws are covers the statutory position, and whether an association can stop you installing solar covers the question I am asked most.

So if a rule in a packet seems to prohibit something you believe is protected, check the law rather than assuming the document wins.

How to get the documents, and when

Ask for them as early as you can rather than treating them as a closing formality.

In Utah the association or its management company supplies them, often for a fee, and it can take days. If you are under contract with a due diligence period running, requesting the packet on day one rather than day five matters.

What due diligence means in a Utah real estate contract covers the window you are working inside.

The dues figure is not comparable on its own

The mistake that costs people most when they compare two communities.

Some associations cover water, sewer and trash. Some cover landscaping of your own front yard. Some cover a pool, a clubhouse and nothing else. A figure that looks high may include utilities you would otherwise pay separately, and a low one may cover almost nothing.

The only honest comparison is dues plus whatever utilities the dues do not cover. Build that number for each community before you decide one is cheaper.

Then ask what the dues have done over the last five years. A community whose fee has risen steadily is telling you something about its costs; one that has not moved in a decade may be underfunding its reserves, which brings you back to the study.

New construction is a special case

Because the association is often still controlled by the developer.

Early in a community the builder typically controls the board, the budget is a projection rather than a history, and there is no reserve study worth the name because nothing has aged yet. The dues quoted may also be a starter figure that rises when the developer hands over.

So on a new build, ask when control transfers to the homeowners, what the projected dues are at full build-out, and whether the current figure is subsidized by the builder. What questions to ask a builder in Herriman covers the broader set, and these belong on it.

What I actually see

Buyers who read the rules carefully and never opened the budget.

That is the wrong way round. The rules affect whether you enjoy living there. The budget and the reserve study affect whether you get a bill for several thousand dollars in year three. The second one is the money question and it is the one people skip, because a reserve study is dull and a pet rule is interesting.

The other thing I see is buyers who ask the seller what the dues cover and take the verbal answer. Get the itemized list. What the Daybreak association covers is a worked example of how much variation sits inside a single community, and two associations charging similar amounts can deliver completely different things.

What to do next

Request the packet the day you go under contract. Then read the budget and reserve study first, the minutes second, and the rules last.

Ask in writing whether there is any pending special assessment or litigation, because that one may not be in the packet at all.

I am Kelsey Earl, a Realtor with Keller Williams South Valley, and I will read the sixty pages with you. Send me the community you are looking at and I will tell you what to request.