Overview

Buying a home in a California HOA is not just a real estate transaction. It binds you to a legal framework that controls how you use your property, what you must pay, and how the HOA handles disputes.

These risks are not hypothetical. Homeowners living in HOAs routinely face unexpected special assessments, insurance shortfalls, aggressive enforcement actions, and ongoing conflicts with ego-driven HOA boards that exercise broad authority under the governing documents. These problems do not just suddenly appear after you close escrow. They already exist, and buyers run into trouble because they do not know where to look or what to review before they commit.

Every HOA leaves a paper trail, and you can review it before you buy. Financial disclosures, CC&Rs, meeting minutes, insurance summaries, and litigation records reveal how the HOA actually operates. Conversations with current residents can further confirm what those documents show or expose problems that the documents do not capture. These sources often expose warning signs that buyers miss when they focus only on the property itself.

This Fact Sheet identifies twelve specific red flags you should evaluate before buying a home in a California HOA. Each red flag ties directly to legal and financial risk, and you can identify each one in advance if you review the right documents and ask the right questions. [If you’d like to watch an episode of my HOA HELL podcast where I touch on this subject, check out “How California HOAs Really Work: What Buyers Miss, and What Homeowners Need to Know.”]

Key Points

To evaluate whether you should buy into a California HOA, you need to focus on risks that can affect your finances, your property rights, and your day-to-day living experience. The following twelve red flags identify problems you can detect before you buy if you review the right documents and ask the right questions.

Underfunded Reserves Signal Future Special Assessments

California law requires HOAs to prepare and distribute annual disclosures that include reserve funding information under Civil Code 5300, 5550, and 5565. If reserve studies show low funding levels or large projected deficits, the HOA will eventually need to raise money, often through special assessments. For example, if a condominium HOA has aging roofs or plumbing systems but only a fraction of the required reserve funds, homeowners may face large, unexpected assessments shortly after purchase. [I covered the ins and outs of HOA reserves in detail on HOA HELL with my two-part episode “What Every California Homeowner Needs to Know About HOA Reserve Funds.” Here’s the link to both episodes: Episode 1 and Episode 2. I’ve also written extensively on HOA reserve studies, including Fact Sheets like: “California HOA Reserve Study Requirements: How Often They’re Required and What Must Be Included,” “How California HOAs Manipulate Reserve Studies and What Homeowners Can Do to Protect Themselves,” and “HOA Reserve Studies in California: Understanding the “Percent Funded” Number.”]

A History Of Special Assessments Indicates Ongoing Financial Instability

Review the HOA’s financial disclosures and meeting minutes to see whether the board has imposed repeated special assessments. A special assessment here and there does not necessarily indicate a problem. Multiple special assessments over a short period of time, or unusually large special assessments, usually indicate poor planning, deferred maintenance, or both. You should count on that pattern continuing after you buy. [If you’re interested in taking a deeper dive into special assessments, you can tune into an HOA HELL episode called “California HOA Special Assessments: Why Your Dues Keep Rising and a Huge Bill May Be Coming,” or you can read my Fact Sheet, “California HOA Special Assessments: What They Are, When They’re Legal, and How Homeowners Can Challenge Them.”]

Pending Or Recent Litigation Creates Financial And Insurance Risk

While the Davis-Stirling Act does not require the HOA to disclose the existence of any pending litigation (or threatened litigation) directly to the membership in the Annual Policy Statement, California’s mandatory Real Estate Transfer Disclosure Statement (Section II, Part C, Question 13), as mandated by Civil Code 1102.6, requires all sellers to disclose the existence of any lawsuits that threaten or affect the property. If the seller discloses any litigation, do not stop there. Request the complaint, any cross-complaints, and any available status updates, and review them carefully so you understand the claims, how far the case has progressed, and what financial or practical consequences could affect the property or the HOA after you buy.

Insurance Coverage Gaps Can Expose You To Significant Out-Of-Pocket Losses

HOAs must disclose insurance information under Civil Code 5300. Review the master policy limits, deductibles, and exclusions. Inadequate coverage, especially for fire or water damage, can leave homeowners responsible for large shortfalls.

In many California communities, insurers have stopped offering or renewing coverage for certain types of losses entirely. Take high fire-risk areas. Homeowners (and HOAs in the cases of condos or townhomes) who purchase properties in those high fire-risk areas cannot obtain coverage from traditional insurance companies, and state regulations force them onto the FAIR Plan as a last-resort option. FAIR Plan coverage often does not keep pace with actual rebuild costs, especially in higher-cost markets, so a major loss can create a significant shortfall that homeowners must cover out of pocket. In multi-family HOA communities, this results in massive special assessments (such as those we’re now seeing following the disastrous wildfires that devastated Altadena, the Palisades, and Malibu in early 2025). [I’ve written and podcasted extensively on the FAIR Plan and its effects on HOA members in California following those massive wildfires. If you’re interested, check out: “Altadena & Palisades Fires: Why California FAIR Plan Insurance Isn’t Enough to Rebuild,” and “California FAIR Plan 2026 & Altadena / Palisades Fires: Why Many HOA Owners Are Underinsured.” I’ve also written and podcasted on other post-fire disaster issues as they relate to HOAs. For example, you might be interested in “Can My California HOA Block Me from Rebuilding After the Palisades Fire or Other Disasters?” and “Can My California HOA Interfere with My Rebuilding After a Fire or Other Disaster?”]

Broad Architectural Control Gives The HOA Significant Power Over Your Property

Civil Code 4765 allows HOAs broad authority to regulate architectural changes. Some HOAs, for example, impose strict architectural rules that can limit landscaping choices, exterior modifications, paint colors, hardscaping, fencing, window replacements, and other visible improvements, which can significantly affect how much control you will have over the property after you buy. Review the CC&Rs and architectural guidelines to see how much discretion the HOA exercises. Then make a decision as to whether you feel comfortable giving up that much control. [If you’d like to learn more about architectural approvals, try “California HOA Architectural Approvals: What Civil Code 4765 Really Requires.”]

Aggressive Or Inconsistent Enforcement Practices Create Ongoing Conflict Risk

Civil Code 5850 requires due process before the board imposes discipline, but enforcement practices vary widely from HOA to HOA. Talk to a few residents in the community before you buy (preferably from different parts of the development). Ask them about the board and the management company, and how they handle enforcement of the governing documents.

Rental Restrictions Can Limit Your Flexibility And Future Plans

If you’re interested in renting out your property to others, you need to determine what, if any, rental restrictions the HOA has in place. Civil Code 4741 limits certain rental restrictions, but HOAs can still impose rental caps and prevent short-term rentals entirely (i.e., rentals of 30 days or less). Review the CC&Rs and Rules for caps on rentals, lease terms, and approval requirements. [For more information on the extent and scope of HOA control over rentals in California HOAs, check out my Fact Sheets “Can My California HOA Stop Me From Renting Out My Home or ADU?,” and “Can My California HOA Ban Airbnb or Short-Term Rentals?”]

Maintenance Obligations May Not Align With What You Expect

Civil Code 4775 establishes default rules for maintenance, repair, and replacement, but those defaults apply only if the CC&Rs do not say otherwise. Many HOAs shift significant responsibility onto homeowners through their governing documents, especially for exclusive use common areas such as balconies, patios, plumbing lines, windows, and doors. Before you buy, review the CC&Rs to determine exactly who is responsible for maintaining, repairing, and replacing each component of the property.

Board Governance Problems Often Appear In Meeting Minutes And Homeowner Feedback

Review board meeting minutes, agendas, and speak with current residents to evaluate how the HOA actually operates day to day. The Open Meeting Act requires HOAs to properly notice meetings, distribute meeting agendas, and document meetings with minutes. Missing agendas, incomplete minutes, or meetings held without proper notice signal a red flag you shouldn’t ignore. You should also ask current members about how the management or board addresses homeowner complaints. Unreasonable delays, especially when related to urgent matters, indicate a serious governance problem.

Lack of Transparency is a Serious Problem You Should Never Ignore

Civil Code 5200 requires HOAs to make a broad range of association records available for inspection, including financial documents, meeting minutes, and other records used to conduct HOA business. If an HOA resists producing records, provides incomplete responses, or delays access without a clear legal basis, that is a red flag that the board or management may not be operating transparently. [I’ve written more than 10 different articles and Fact Sheets detailing homeowners’ rights under 5200 to a wide array of HOA-related documents. If you’d like to learn more about your rights to HOA documents, check out “What HOA Documents Am I Legally Entitled to See in California?,” which contains links to several other related works.]

High Delinquency Rates Among Homeowners Can Lead to Disaster

HOAs rely on assessment payments to fund operations, maintain common areas, and meet their financial obligations. When a significant number of owners fall behind, the HOA loses revenue and often shifts the burden onto paying members through increased assessments, special assessments, or reduced maintenance (which represents a significant problem on its own). Financial disclosures provided under Civil Code 5300 can reveal delinquency levels, collection activity, and whether the HOA is struggling to meet its budget.

High delinquency rates also create a very serious problem related to your ability to sell your house. If 15% or more of the units in the HOA are 60 or more days delinquent on the payment of general or special assessments, the project becomes ineligible for Fannie Mae financing. Once that happens, buyers cannot obtain conventional loans for units in the community. That effectively shuts down the conventional loan market for the entire development, drastically reduces the pool of qualified buyers, and can make it virtually impossible to sell your home. [If you’d like to learn more about what happens when an HOA is de-listed (or declared “unavailable”) by Fannie Mae, read “California Condo Declared “Unavailable” by Fannie Mae and How HOAs Can Fix the Problem.”]

If Multiple Red Flags Appear, You Should Reconsider The Purchase Or Investigate Further

No HOA is perfect, and most communities will have at least one issue somewhere in their records. The problem arises when multiple red flags appear together. A single issue, such as a modest reserve shortfall or a past dispute, may be manageable. But when you see a combination of financial weakness, litigation, insurance gaps, governance problems, and high delinquency rates, those issues tend to reinforce each other and create a much higher level of risk.

For example, an HOA with underfunded reserves, ongoing litigation, and rising delinquencies is more likely to impose special assessments, increase dues, or defer maintenance, all of which can affect property values and quality of life. Similarly, an HOA with poor governance and lack of transparency may fail to address problems before they escalate, leaving homeowners to deal with the consequences after they purchase.

Before moving forward, step back and evaluate the overall pattern rather than focusing on any single issue in isolation. When multiple warning signs point in the same direction, the safer decision may be to walk away or, at a minimum, conduct deeper due diligence before committing to the purchase.

If You Want To Discuss These Issues With An Experienced HOA Attorney, Then Call MBK Chapman

The HOA lawyers at MBK Chapman are among the most well known and respected HOA attorneys in the State of California, and our firm is considered an industry leader on the homeowner side. So call us if you have questions before you pull the trigger on a questionable purchase.

Buying into an HOA is a decision that carries long-term legal and financial consequences, not just short-term convenience. Once you close, you inherit the HOA’s financial condition, its governing documents, and the way its board actually operates. You cannot opt out later if problems surface. That is why the time to identify risk is before you buy, not after.

FAQs

What documents should I review before buying into a California HOA?

At a minimum, review the CC&Rs, Rules, and architectural guidelines. You also want to review the most recent annual disclosures required under Civil Code 5300, reserve studies, meeting minutes, insurance summaries, and any litigation disclosures in the Transfer Disclosure Statement. These documents show how the HOA operates, how it spends money, and whether problems already exist.

How can I tell if an HOA is financially healthy?

Check reserve funding levels, the frequency of special assessments, and delinquency rates in the HOA’s financial disclosures. Underfunded reserves, repeated assessments, or a high percentage of owners behind on payments are strong indicators of financial risk.

What should I ask current residents before buying into a California HOA?

Ask whether the HOA responds promptly to maintenance issues, follows through on repairs, gives clear notice of meetings, and applies rules consistently. Current residents can often tell you, faster than any document, whether the board runs the community competently or turns routine issues into recurring disputes.

How do I know if the HOA enforces its rules fairly?

Review meeting minutes, violation logs if available, and talk to current residents. Look for patterns such as frequent fines, inconsistent enforcement, or complaints about selective enforcement.

Why do assessment payment delinquency rates matter when buying into an HOA?

If 15% or more of the units are 60+ days delinquent on paying regular or special assessments, Fannie Mae will delist the development, meaning that it will not back any loans for property purchases in that HOA. That can shut down conventional loans for buyers and tank property values across the community.

Can I review HOA records myself before I buy the property?

Yes, but only if you ask for them. The seller is required to provide certain documents during escrow, but those disclosures are often incomplete or not reviewed carefully by buyers. You can request additional records, such as meeting minutes, budgets, and reserve information, and you should take the time to read them. If you do not review these materials before closing, you are accepting the HOA as it operates, not as you assume it operates.

About MBK Chapman Fact Sheets

Homeowners searching for answers online will often come across articles that appear authoritative, but are actually written as search-engine marketing content rather than by an experienced HOA lawyer. These pieces tend to prioritize keyword density over clarity, accuracy, or legal context, which often leaves homeowners more confused than informed.

At MBK Chapman, our Fact Sheets are part of our HOA Law Library and are written by Michael Kushner, an HOA lawyer with decades of hands-on experience representing California homeowners. In fact, Michael Kushner is the HOA lawyer who pioneered the systems and strategies used by some of California’s most successful homeowner-side HOA law firms.

Each Fact Sheet is deliberately concise, statute-based, and designed as a quick-reference guide to help homeowners understand key HOA laws and enforcement rules at a glance.

HOA HELL,™ a groundbreaking book for California homeowners by Michael B. Kushner

Buying a Home in a California HOA? 12 Red Flags to Look Out For Before You Buy