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Upping your HOA IQ will benefit you in the long run.

Step 4: Get to Know the HOA

The homeowners association, or HOA, marks the biggest difference between a single-family home and a condo or loft home.

"An HOA is the entity established by the project developer that is turned over to the condo-unit buyers once buyers have closed on a pre-established number of units, usually around 50 percent," says Roy E. Carroll II of The Carroll Companies. "The HOA in most condo situations is responsible for collecting dues and maintaining the common areas."

In addition to these financial responsibilities, the HOA can change the rules governing the property, like the size of the dog you can have and the operating hours of the pool or fitness center. Many HOAs are also responsible for certain shared utility costs like water or heat. Sound like a lot of power? It is, Carroll says.

"With the HOA having a fairly wide scope of power and responsibility, it is important to attend the HOA meetings," Carroll says.

Before you buy a condo or loft and join the HOA:

• Find out what the monthly dues are and if an automatic debit system is available;
• Ask for a copy of the HOA's covenants, conditions and restrictions (CC&Rs) as these rules can limit improvements or alterations you can make to how many pets you can have;
• Ask for a copy of the HOA bylaws, which dictate in fine detail how the association should operate;
• Ask about any special assessments that were made in the past three years;
• Meet the HOA president and ask any questions you may have about the community;
• Find out when and where meetings are held;
• Ask for a copy of the latest budget and meeting minutes. Review them to see how dues are being spent.

Read this article for more information on HOAs.

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