Do your homework on the HOA

You may be excited at the prospect of moving into a cluster home complex or an estate and leaving behind your worries about security and many of your current home maintenance expenses.

But there is some important information you must obtain before moving into any community governed by a homeowners' association (HOA).

Before buying into an existing estate, for example, you should review the constitution or governing document of the HOA and see what responsibilities this covers; read the minutes of HOA meetings for at least the past year to ensure that there are no "hidden issues" or pending litigation which could lead the association into unexpected expense; and ask to see the current HOA budget and records of expenditure and levy collection, which will tell you how well the estate is being managed.

It is also a good idea to check whether the insurance on the common property is comprehensive and up to date, and check what funds the HOA has in reserve for planned maintenance work and unexpected expenses.

If you are buying off-plan into a new estate, you should find out whether all owners in the estate will automatically become members of the HOA, and whether this will be constituted as a Section 21 company.

This is really important because unless every sale agreement provides for automatic membership of the HOA, it will be almost impossible for owners ever to obtain consensus on any major expenditure that becomes necessary. And unless the HOA is set up as a Section 21 company it could prove very difficult to establish and maintain proper financial controls - and it will be your money, in the form of your monthly levy or assessment, that is at risk.