HOA Fees, Reserve Studies, and Special Assessments: What to Ask Before You Buy
The HOA fee is the number everyone asks about. It's not the only number that matters.
Older man and woman reviewing documents together at home
Start with what the fee covers specifically
"HOA fee" can mean exterior maintenance and landscaping only, or it can include snow removal, trash, water, a rec center, and a clubhouse. Two communities with similar-looking fees can offer very different value once you know what's actually bundled in. Get the line-item breakdown, not just the total.
Ask about the reserve study
A special assessment is a one-time extra charge beyond the regular HOA fee, usually to cover a repair the reserve fund didn't have enough saved for. Ask directly: has this HOA had a special assessment in the last five years, and is one currently being discussed?
Some communities also charge a capital contribution fee
This is a one-time fee at purchase (I've seen it run around 0.5% of the purchase price) that goes into the HOA's reserves rather than to the seller. It's normal, but it should be disclosed and accounted for in your closing costs, not a surprise at the table.
Access to HOA docs
During the contract's contingency period, we get access to the HOA's financial statements and reserve study (when one exists) so you're deciding with real documents in hand, not a verbal summary from a listing agent. If something in those documents raises a flag, that's exactly when to raise it, before closing, not after.
Reading a Reserve Study Without Being an Accountant
You don’t need a financial background to get useful information from a reserve study, you need to know what to look for. The key number is the “funded ratio,” roughly, how much the HOA has saved versus how much it’s projected to need for future repairs. A community funded well below 70% is more likely to need a special assessment down the road; one closer to 100% has more cushion. It’s on you to read these documents closely during your review period, I don’t give you a pass/fail verdict on them, that’s not my call to make, but if a number doesn’t make sense, I’m glad to help you understand what you’re looking at.
What Happens If a Special Assessment Hits After You’ve Moved In
This is the question I get most often, and the honest answer is: it depends on the HOA’s governing documents and the specific assessment, sometimes it’s a single payment, sometimes it can be financed over time through the HOA itself. It’s worth asking the HOA directly how past assessments were structured for current owners, not just whether one happened.
For condos and townhomes, there’s also a way to hedge this risk: ask your insurance agent about adding a loss assessment coverage rider to your policy. It won’t cover every kind of assessment, it generally applies to ones tied to a covered loss like property damage, not routine capital improvements, but it’s an inexpensive add-on worth asking about before you close.
Fee Increases Are as Important as the Current Number
The HOA fee you see today isn’t necessarily what you’ll pay in five years. Ask for the fee history over the last several years, not just the current amount, a steady, modest annual increase is normal and usually a sign of healthy budgeting. A fee that jumped sharply in a single year is worth asking about directly, it may be a one-time correction, or it may point to a bigger funding issue.
— Trina Oyloe, SRES® | Your South Metro Denver Realtor
303-378-9333 | Trina@RealtorTrina.com