HOA
A homeowner’s association, or HOA, is the governing body of a common interest community (abbreviated CIC in real estate contracts). HOAs usually have monthly, quarterly, or yearly dues that cover a certain amount of community benefits. These can be community amenities, like a pool or clubhouse; common utilities like water, sewer, or trash; and/or maintenance items of common areas, like landscaping, roof, or snow removal.
HOAs will often have rules or covenants that residents must abide by. These can include the condition of the yard or exterior of the home, placement of trash cans, vehicles, or decorations, or even the paint color of the home.
If a buyer is under contract to purchase a home that is in a common interest community, they will receive the HOA’s documentation, including bylaws, covenants, information about dues/fees, financial statements on reserves and special assessments, and more. It is the buyer’s responsibility to review these documents! If the buyer finds anything that may affect their willingness to purchase the property, they can ask for more information or, ultimately, terminate the transaction based on those findings.
HOA fees with a real estate transaction can include a fee for a status letter (a statement from the HOA showing any money due, any special assessments, etc) or a record change fee or ownership transfer fee. If there are any special assessments that have been levied prior to closing, they will usually be the responsibility of the seller (check with your agent and check your contract to make sure).
Inspection
Inspection is your opportunity to examine every aspect of the house you're purchasing! An inspector will look at all of the systems and features of the home and give you a report with their findings.
An inspection in the Denver area can range from $600-$900 depending on what they are including - radon, sewer scope, etc.
Using that report, we will create a list of items that you are asking the seller to fix (an Inspection Objection - see below). The seller may agree to all or some of the fixes, or offer a credit to cover certain items.
Inspection Objection & Resolution
An inspection objection is submitted by the buyer to the seller and lists the items the buyer is asking the seller to fix. (You can take a look at a blank Inspection Objection here. Only the buyer signs this document.) After we receive the inspection report, we discuss the findings and decide what we want to ask the seller to handle. You may have limited your inspection objection scope in your offer - perhaps only objecting to health, safety, and structural items. We will go over what’s important to ask for, and what is less concerning. This is where a lot of the negotiation happens!
If the parties are unable to come to an agreement re: what the seller will fix, the buyer can terminate the contract and get their earnest money back (only out the cost of the inspection).
If the inspection turns up some big issue that you don’t even want to deal with (or ask the seller to fix), the buyer also has the option to terminate before submitting an inspection objection.
If a seller doesn’t want to deal with an inspection item themselves, they may offer a credit or concession to cover the cost of the buyer having it done. Buyer and seller will need to agree on an appropriate amount, and that amount will be applied to the buyer’s closing costs and prepaids at closing. Note that this is a credit out of proceeds - the seller is not handing the buyer cash, but the buyer gets to bring less cash to closing.
Inspection Resolution refers to the document that memorializes the agreement between buyer and seller. Once the parties have agreed on terms, both buyer and seller sign. Inspection Resolution survives closing - meaning that if an item is not repaired before closing, it is still the seller’s responsibility to address, even after closing. You can see a blank Inspection Resolution here.
If you have questions about inspections, check out my friends at Alpine Building Performance (one of my preferred inspection companies)! They have resources including showing checklists, homeowner maintenance suggestions, and preferred vendor lists.