Understanding HOA Documents in Texas: What Buyers Need to Know

When purchasing a property in Texas that is subject to a Homeowners Association (HOA) or a Condominium Owners Association (COA), carefully reviewing the HOA documents is crucial. These documents outline the financial health of the association, the rules and restrictions that govern the property, and any potential obligations the buyer will assume upon purchase. Texas law provides specific protections for buyers, including the right to review these documents within a defined timeline before committing to the purchase.

Key Areas to Review in HOA Documents : 

1. Financial Health of the Association

Budget & Financial Statements – Assess whether the HOA is running a surplus or deficit.

Reserve Fund – The HOA should have sufficient reserves for major repairs or unexpected expenses.

Special Assessments – Determine if there are any pending or recent special assessments that could lead to additional fees.

Delinquencies – Review the percentage of owners who are behind on dues, as a high delinquency rate can indicate financial instability.

2. Fees and Dues

HOA Dues – Confirm the amount, frequency, and what the fees cover (landscaping, security, common area maintenance, etc.).

Planned Increases – Check if the HOA has scheduled increases in fees.

Transfer & Resale Fees – Some HOAs charge fees when properties change ownership.

Late Fees & Collection Policies – Review penalties for late payments.

3. Rules & Restrictions (CC&Rs)

Use Restrictions – Some HOAs restrict short-term rentals (Airbnb/VRBO), home businesses, parking, and pet ownership.

Architectural Guidelines – Check if exterior modifications (painting, fencing, landscaping, solar panels) require HOA approval.

Vehicle & Parking Rules – Many HOAs limit street parking, RVs, boats, and commercial vehicles in the neighborhood.

Lease Restrictions – Some communities have rules on leasing, including rental caps or prohibitions against short-term leases.

4. Maintenance Responsibilities

Owner vs. HOA Responsibilities – Determine whether the HOA is responsible for maintaining the roof, exterior, foundation, or plumbing.

Common Areas & Amenities – If the HOA maintains pools, parks, or private roads, verify their condition and any planned repairs.

Special Assessments for Repairs – Look for any upcoming assessments for major community repairs or renovations.

5. Insurance Coverage

HOA’s Master Insurance Policy – Understand what’s covered under the HOA’s policy and whether you’ll need additional coverage.

Liability Insurance – Ensure the HOA has adequate liability coverage to protect against lawsuits.

6. Legal Issues & Disputes

Pending Litigation – Review whether the HOA is involved in any lawsuits, which could be a financial red flag.

Dispute Resolution & Fines – Check how the HOA enforces its rules and whether fines or legal action can be taken against owners.

7. Meeting Minutes & HOA Operations

Recent Board Meeting Minutes – These provide insight into the HOA’s operations, upcoming projects, and ongoing disputes.

Planned Capital Improvements – Look for major upcoming projects that could result in higher dues or special assessments.

8. Owner vs. Renter Ratio

Lenders may hesitate to finance properties in communities with a high percentage of rental properties, which can affect resale value.

Texas-Specific Considerations

Under Section 207.003 of the Texas Property Code, buyers are entitled to receive a Resale Certificate when purchasing a property governed by an HOA. The Resale Certificate provides details on the property’s standing with the HOA, financial health, assessments, and any violations. Per the Texas Real Estate Commission’s (TREC) Addendum for Property Subject to Mandatory Membership in a Property Owners Association, sellers must deliver this information within the agreed contract timeline.

For condominiums, the Texas Property Code Section 82.157 outlines similar requirements. The Resale Certificate must have been prepared no more than three months before delivery to the buyer, and buyers retain the right to terminate the contract within seven days of receiving it if they find anything unfavorable.

Why Reviewing HOA Documents is Critical

HOA documents can span hundreds of pages, making it essential to thoroughly review them within the contract’s specified review period. Buyers should ensure they read not only the Resale Certificate but also the bylaws, rules, regulations, and financials to avoid unexpected costs or restrictions after closing. It’s equally important to verify the date on the Resale Certificate, as Texas law mandates that it must be current within the allowed timeframe for validity.