When purchasing a home in a condominium or planned community in Arizona, you’re not just buying a property—you’re also joining a community governed by a Homeowners Association (HOA). This brings both benefits and obligations that can significantly impact your ownership experience and financial responsibilities.
The H.O.A. Condominium/Planned Community Addendum is a critical document that supplements your purchase contract when buying in an HOA community. This three-page form, created by the Arizona Association of REALTORS®, ensures you receive important information about the association’s rules, fees, and financial status before committing to your purchase.
In this comprehensive guide, we’ll examine each section of the HOA Addendum, explain why this information matters, and provide practical insights to help you make informed decisions when purchasing in an HOA community.
Before we dive into the specifics, it’s important to understand why this addendum exists. Arizona law requires sellers to provide buyers with detailed information about homeowners associations. This transparency helps:
The HOA Addendum facilitates this disclosure process and creates a paper trail confirming that proper information was provided.
The HOA Addendum is organized into three main sections:
Let’s explore each section in detail.
The first page of the addendum is completed by the seller when listing the property and provides essential information about the homeowners association(s).
This section identifies:
Many communities actually have multiple layers of HOAs—for example, a master association for the entire development and a sub-association for your specific neighborhood or condominium building. The form accommodates this by providing fields for both primary and master associations.
Example: Primary HOA: Saguaro Heights Community Association – $85 monthly dues Master Association: North Valley Master Planned Community – $45 quarterly dues
This section details one-time fees you’ll pay when purchasing the property:
Arizona law caps disclosure fees at $400 per association, with a maximum $50 update fee (if 30+ days have passed) and $100 rush fee (for expedited processing).
Understanding these fees is crucial for accurate closing cost estimates. They can add up to several hundred or even thousands of dollars, especially if multiple associations are involved.
The second page outlines legal requirements for providing HOA information to buyers, based on Arizona Revised Statutes §33-1260 and §33-1806.
The timing of HOA disclosures depends on the size of the association:
As the buyer, you have five days after receiving the HOA documents to review them and provide written notice of any disapproved items. This is an important protection—if you find concerning rules, restrictions, or financial issues in the HOA documents, you can back out of the contract and receive your earnest money back.
The addendum lists specific documents and information that must be provided:
These documents provide a comprehensive picture of the community you’re joining, its financial health, and the rules that will govern your ownership.
The final page of the addendum is where you, as the buyer, acknowledge receipt of the HOA information and agree to certain terms regarding HOA fees.
This section specifies who will pay the various fees associated with the HOA transfer:
This clarity prevents misunderstandings about who’s responsible for these costs at closing.
The addendum also clarifies that any HOA assessment that is a lien as of the close of escrow will be paid by the seller, while any assessment that becomes a lien after closing is the buyer’s responsibility. This protects you from inheriting the seller’s unpaid HOA obligations.
The final section reminds you to:
By signing this section, you’re acknowledging receipt of HOA information and accepting the terms regarding fee allocation.
Now that we understand the mechanics of the HOA Addendum, let’s discuss why this information matters and what to look for when reviewing HOA documents.
HOA fees directly impact your monthly housing costs and must be factored into affordability calculations. When reviewing HOA documents, pay attention to:
Warning Signs:
Example: Maria was considering a condo with $275 monthly HOA fees, which fit her budget. However, after reviewing the financial statements, she discovered reserves were severely underfunded and a special assessment for roof replacement was being discussed. This potential $10,000 per unit assessment made her reconsider the purchase.
HOA rules and restrictions can significantly impact your lifestyle and property use. Review the CC&Rs and rules for:
Warning Signs:
Example: John, who works from home, discovered the HOA prohibited home-based businesses that receive clients. Since occasional client meetings were essential to his work, this rule made the property unsuitable for his needs.
The way an HOA is managed directly impacts your ownership experience. Look for:
Warning Signs:
Litigation can be expensive and disruptive. Review disclosure documents for:
Warning Sign: A condo association involved in a construction defect lawsuit might face uncertain special assessments depending on the outcome.
Beyond the specific documents, here are some broader considerations when evaluating an HOA property:
A financially healthy HOA maintains adequate reserves, keeps assessments reasonable, and plans proactively for maintenance. Signs of financial trouble include:
HOA fees typically fund amenities like pools, gyms, landscaping, and security. Consider whether:
Example: A luxury condominium with extensive amenities might charge $500+ monthly in HOA fees. If you rarely use the pool, concierge, or fitness center, you’re paying for services you don’t value.
If you might want to rent your property in the future, carefully review rental policies:
Some HOAs prohibit rentals entirely or impose restrictions that could interfere with your investment plans.
Beyond the formal documents, try to assess the culture of the community:
Special assessments can impose significant unexpected costs. Ask:
To effectively use the HOA Addendum in your home purchase:
The HOA Addendum operates within strict timeframes:
Seller disclosure timeline:
Buyer review period: 5 days after receipt of HOA documents
Fee payments: At closing, as allocated in the addendum
Missing these deadlines can have serious consequences, from delaying your closing to inadvertently accepting HOA terms that don’t work for you.
The H.O.A. Condominium/Planned Community Addendum is more than just another form in your real estate transaction—it’s your window into the community governance, rules, and financial obligations that will affect your ownership experience for years to come.
While HOA living offers many benefits—from maintained amenities to consistent neighborhood standards—it also comes with costs and restrictions that aren’t right for everyone. The HOA Addendum ensures you have the information needed to make an informed decision before committing to your purchase.
Remember that while the standardized HOA Addendum form is the same for everyone, the HOA documents it references will vary dramatically between communities. A thorough review of these materials is essential to understanding what you’re signing up for.
By understanding the purpose and proper use of the HOA Addendum, you can confidently evaluate whether a particular HOA community aligns with your lifestyle, preferences, and financial goals. This knowledge helps ensure your new home brings satisfaction rather than surprises, allowing you to enjoy the benefits of your community while understanding your responsibilities as an association member.
Work closely with your real estate agent to interpret HOA documents, ask the right questions, and meet all review deadlines. With proper attention to these details, you’ll be well-equipped to make a sound decision about purchasing in an HOA community in Arizona.