All About HOAs: Important Things to Know Before Buying a Condo or Townhome

Raziel Ungar

Raziel Ungar

September 15th, 2021 - 7 min read

My clients often ask what to consider when buying a condo or townhome in San Mateo County. In this article, my goal is to educate you on both big-picture items and nuances, so you feel comfortable and knowledgeable about something that is perhaps not as intuitive as it seems on the surface.

If you’re thinking about buying a condominium or townhome -- and in a few spots in San Mateo County, a single-family attached, or detached, home -- then as part of your purchase, you’ll be joining a homeowners’ association (HOA). Below, I’ll give you a general overview of what this all means.

What Is an HOA?

An HOA is an organization that governs community regulations and how residents pay for common expenses. In almost all cases, homeowners governed by HOAs pay a monthly fee to help pay for upkeep and repairs of common areas, including damages caused by unforeseen events that are typically paid for by the building’s cash reserves. For reference, most monthly HOA fees that I see range from $300 to $700 a month. More on that later.

According to the California Homeowners Associations, HOAs run nearly 400 San Mateo County communities (basically buildings with condos or townhomes). Note that while the following numbers are a few years old, all real estate statistics are essentially a moving target. For example, newly constructed buildings might form a new HOA, just as some communities might dissolve an HOA for various reasons.

But if you’re shopping for a condo or townhome in San Mateo County (or in some cases a single-family home), these numbers can help you understand the landscape a bit better. The most recent number of local HOAs by community include:

  • Burlingame - 29

  • San Mateo  - 160

  • Foster City - 41

  • Redwood City - 115

  • Menlo Park - 47

  • San Carlos - 16

  • Belmont - 5

  • Millbrae - 4

  • South San Francisco - 12

  • San Bruno - 3

What Would Be an Example of an Attached or Detached Single-Family Home Within an HOA?

Ahh, that is a good question. When we commonly think of HOAs we tend to think about buildings with condos, or townhomes that are multilevel and side-by-side (with either an attached garage underneath or parking close by). However, there are also spots where HOAs contain single-family homes. 

A single-family attached home would be like what you might see in the Sugarloaf neighborhood in San Mateo, where there’s three structures in a row -- townhome style --  with shared walls. A single-family detached house would be what you’d expect: a freestanding home in a neighborhood governed by an HOA.

You’ll find single-family homes run by HOAs in most of Foster City and Redwood Shores, and they lay out community rules. In Redwood Shores, for example, there are many neighborhoods that dictate the colors of homes, the types of roofs permitted, whether solar power is allowed, common area maintenance guidelines, and more. 

Then, there is also a Master Association for the entire community, which takes care of issues such as landscaping and involves a nominal yearly fee. In some HOAs, these fees could help maintain a pool or tennis courts. In other parts of the country, HOA members’ fees cover the costs of full-time security guards in a gated community.

Paperwork and Making an Offer

Buying a home involves plenty of paperwork, including reviewing documents from the lender, home inspector, appraiser, and seller. Joining an HOA entails reading and understanding even more documents and that can seem overwhelming.

HOA documents explain your rights and obligations as an owner once you become a member of the community. They typically address the fees you’ll pay, how the money is spent, community rules and regulations, and other aspects of how the HOA functions. 

But all this information isn’t contained in a single document; in San Mateo County (and around the U.S.), there could be more than a dozen HOA documents that you need to examine before you submit your offer. Standard practice is for buyers to be provided all HOA documents via the disclosure 

To submit a successful offer, you may need to waive contingencies, which makes understanding everything in the paperwork even more critical. Consulting with a trusted real estate agent with knowledge of the local market will help you understand the details of the particular HOA you’re considering joining.

All this being said, it’s super important that you read and fully understand HOA documents and take your time to ask any questions of the seller, your agent, or the HOA too.

Fees and Insurance

HOA fees should be top of mind for potential buyers, as they factor into your loan size and monthly mortgage payment. Lenders will most likely include HOA fees in your home buying budget before they prequalify you.

This is important because if your loan has been underwritten for a purchase price of a single-family home for $1.4 million, that is based on your debt-to-income ratio. An HOA fee of $400 a month, for example, could theoretically reduce your maximum purchase price given the increase in carrying costs. If your finances are solid and you can afford a higher purchase price, then this is likely not an issue.

Monthly HOA fees pay for regular upkeep to common areas of the building, such as lobbies and outdoor spaces. The community typically also reserves cash to cover unexpected events, like a leaking roof, or damages from the summer 2021 earthquakes like those in the East Bay and the Lake Tahoe area. Larger HOA fees shouldn’t necessarily scare you off when searching for a property. More on that later. 

Keep in mind that the fee is typically split between operating expenses (such as insurance, landscaping, electricity for outdoor lighting, and management fees) and building the HOA’s cash reserves to spend on capital updates - like a new roof. 

A building with higher monthly payments that is managed well will save you headaches in the long run and mitigate the need for a special assessment. A higher HOA fee could also mean that the building has a lot of needed improvements, so the HOA board voted to increase fees to include the reserves to pay for these repairs. Or, all members of the HOA could have voted to do a special assessment if the reserves are too low to pay for upcoming or overdue repairs.

One thing to keep in mind is that most HOAs do not include earthquake insurance. This isn’t necessarily a good thing, in my opinion, though I think many boards vote to pass on obtaining it due to the increased cost of sometimes hundreds of dollars a month for each homeowners’ HOA fees. In Redwood Shores, for example, I believe there’s only one or two complexes whose HOA fees include earthquake insurance, and the monthly fees are in the $700 to $800 range. We have earthquake insurance on our primary residence and it’s not inexpensive, in the low hundreds of dollars a month, but totally worth it in my view and allows me to sleep better at night. If you were to ask me though what percentage of buyers do obtain earthquake insurance for their single-family homes, it’s a low percentage, probably in the high single digits.

Buyers who are joining an HOA will often need two types of homeowners’ insurance:

  • A master insurance policy, which covers repairs and accidents that happen in common areas of your HOA. This insurance is not something you’d need to obtain on your own - it’s already in place for the structure.

  • A personal insurance policy, which protects your personal items that are damaged, lost, or stolen from inside your home. This is typically referred to as a “wall- in” insurance policy and is generally similar to a renter’s insurance policy. As a home buyer with a loan, banks typically don’t require you to buy this policy; however it’s a good idea and something that I think is a no-brainer.

HOAs: Lender Considerations

As mentioned above, you’ll need to consider HOA fees before a lender will give you a budget range. 

When signing up for an HOA, lenders might also judge the value of your property based on aspects of the community, such as:

  • The number of homes that are owned by community members versus those that are leased to renters. Lenders are more friendly to buyers who are joining HOAs that have more owners than renters. This is why some HOAs have restrictions that limit the percentage of units that owners may rent. This seems like a good thing since in theory homeowners may take better care of their units than renters, and banks can feel that owner-occupants are less likely to default on their mortgage if it’s the owner’s primary residence. 

  • The quality of the home/building construction and management. The more comfortable lenders feel with both aspects, the more likely they are to approve your loan. Lenders are less likely to lose money on properties that are built and managed well, as homes in such communities tend to hold their resale value.

  • Legal issues. Understandably, lenders can be reluctant to finance homes to buyers in communities governed by HOAs with outstanding lawsuits or those with the potential for future legal problems. This is a good place to dig in before you make an offer. 

HOA documents provided by the seller in the disclosure package will include a document called a “lender questionnaire,” which is completed by the HOA management, or if not professionally managed, usually by the treasurer or president of the association. This document will disclose any pending litigation against the building. Structures that are less than 10 years old with construction defects can end up with HOA suing the developer to cover repairs. 

The developer may push back, of course, if they feel the lawsuit is meritless, too broad, and so on. In any case, these situations can be complicated, and pending litigation makes banks hesitant to extend loans to buyers. 

What does this mean then if you want to sell your condo and there’s an ongoing lawsuit? That’s a tough situation, and sellers will usually need to target cash buyers. Since this buyer pool is a lot smaller, property values can drop in the building. 

I once represented a cash buyer in this kind of situation, and they ended up getting a great deal because they were OK with the level of risk involved and were comfortable that the litigation would be resolved.


HOAs are almost always governed by boards of directors, who are homeowners/members of the community, as well as officers. 

Homeowners who don’t serve on the board of directors or as officers still get to vote on any changes to community rules, improvements, and budgeting considerations.

The by-laws document you’ll see defines how the HOA is structured and run. This document addresses points such as:

  • How the HOA elects the board of directors (including how long they can serve and what happens if they leave or need to be removed)

  • Members’ voting rights, and how many residents need to vote on a certain measure to pass it

  • The frequency of HOA meetings, how they are conducted, and how the minutes (notes) will be distributed to residents

Some of these considerations overlap with another document commonly called covenants, conditions, and restrictions (CCRs).

Covenants, Conditions, and Restrictions (CCRs)

If you’re joining an HOA, you’ll likely run across a document called covenants, conditions, and restrictions (CCRs). In the simplest terms, this document establishes “community rules.”

CCRs can be long and are usually steeped in a lot of legal wording. But they typically address points such as (but not always limited to):

  • Which areas of the building belong to you, as an owner, and which belong to all members of the HOA

  • Maintenance and repair obligations: what owners are responsible for and what the HOA will handle

  • Home improvement standards, including what owners can and cannot do with the interiors and exteriors of their homes

  • Which party is responsible for providing utilities, and how such decisions are made if the HOA provides services for all members

  • General member/owner behavior guidelines, including things like quiet hours at night

  • The types and number of pets you are allowed to own

  • What happens in cases of disasters that damage the building or individual units.

  • Whether you can use your home as a short-term rental unit on services like Airbnb or VRBO. Remember that HOA rules can change at any time via homeowner votes, so these rules are not set in stone.

This is one HOA document you should read carefully, and perhaps several times. Buying a home that you wanted to repaint or remodel - only to later find out the HOA won’t allow it - will be frustrating, to say the least.

Financial Statements

HOAs release financial statements that lay out how the organization manages its finances. The most important details you need to examine include:

  • Balances, which explain the HOAs assets (incoming money), liabilities (potential outgoing money).

  • Income Statement, which calculates the HOA’s revenue vs expenses.

  • Cash Flow Statement, which explains how many HOA fees are coming in and how the organization is spending them.

  • Ledger: An HOA ledger is what you might think. It tracks all of the HOA’s financial moves - including your contributions as a member.

  • Reserve Study: Make sure your agent helps you examine this before you join an HOA. A reserve study is a required document that details the condition of common areas when the HOA might need the money for upkeep, and how residents’ reserve fees will fund any necessary repairs or improvements.

Meetings and Minutes

HOA members are often asked to join meetings to discuss community matters and policy updates/changes. Depending on the HOA, these meetings could occur every month, every quarter, or twice per year. If the building is small enough, there may even be one meeting per year. Some are on nice letterhead and others are a simple document with a few agenda items and a recap. The bigger and more professionally managed the HOA, the more “official looking” the meeting minutes will be.

Even if your HOA doesn’t make these meetings mandatory, having someone in your household attend is still in your best interest, since you will be aware of what is going on in your community and how it affects you. If you can’t make meetings because of scheduling conflicts or travel, you should read the minutes that the secretary records.

How HOAs Benefit Homebuyers

It’s true that HOA fees place an additional monthly expense on homebuyers. However, they can relieve some of the time, stress, and money that comes along with owning a home that doesn’t have an HOA, such as:

  • Lawn care and landscaping maintenance

  • Exterior structural repairs

  • Damages caused by natural disasters or other unexpected events

Basically, many perceive owning a condo as “stress-free” and less maintenance to deal with compared to a single-family home. I certainly agree with this. However, many people have been in situations where they felt the “HOA was difficult” or the board couldn’t agree on scope of work for repairs, etc. 

While understanding HOA rules and documents can feel overwhelming, it will help make sure that you make a home purchase you won’t regret later.  

If you need help navigating your options in San Mateo County, feel free to reach out to me at 650-822-7088, or shoot us an email at

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