Condominiums are very popular in San Francisco, with some buyers preferring them to single family homes because they can require much less from an owner in terms of maintenance. Instead of having to worry about keeping the landscaping groomed, the gutters cleared and the trim painted, you just write a monthly check for you homeowner’s association (HOA) dues and that (should) cover maintenance, management, and reserves.
The key word being should! A well run condo association will have planned for future replacements by building a reserve account, and will also take appropriate steps to ensure that on-going regular maintenance is taken care of, making sure that little things don’t fester into big problems.
How can you assess the quality of a homeowner’s association?
One of the most important things a buyer can do is to review the meeting minutes for the condominium they are considering buying. CA state law requires the seller to provide the buyer with all relevant HOA documents, including the governing documents, budget, reserve studies, and meeting minutes.
The HOA meeting minutes will give you a very good idea of how the building is being run. What should you look for?
Discussions about potential changes to the budget, homeowner complaints about common area concerns (noise, out of control pets, vandalism, items not being promptly repaired), and discussion of any building defects or other items that will require a repair with a cost that exceeds what is planned for.
The meeting minutes will give you an incredibly important look into how the association is run, and while reading the minutes can be boring and a little tedious, a thorough review of them is fundamental to making an informed condo purchase.
When a building is brand new the may not be any minutes, so reviewing the public report and proposed budget will give you a good idea if the HOA dues have been set realistically.
In smaller HOA buildings, management is often much more informal, which you must be comfortable with. In smaller associations, major repair items are often paid for at the time they are needed (much like a single family) and there isn’t a large reserve account, so you will want to be sure you are comfortable and capable of caring for a building that does not have a large HOA reserve fund.