How to Read HOA Documents Before You Offer on an SF Condo

Start with the reserve study's percent funded number, then the minutes, then the insurance declarations page. Those three pages predict special assessments better than the other 400 combined. In San Francisco the HOA package usually arrives with the disclosure package before offers, and most winning offers acknowledge it, so the review has to happen in the week before the offer date, not during escrow.

What is in the package

California Civil Code 4525 requires the seller to deliver, as soon as practicable before contract, the governing documents (CC&Rs, bylaws, operating rules), the annual budget report including the reserve funding disclosure, a statement of current regular and special assessments and any assessments approved but not yet due, the HOA's disclosure of unresolved violations and construction defect claims, any rental restrictions, and, if you ask, the last 12 months of board minutes. The HOA has 10 days to produce the documents for the seller, the seller pays for them, and a willful violation carries a $500 penalty. Ask for the minutes and the master insurance declarations page explicitly; they are the two items most often missing.

Reserve study: the percent funded math

The reserve study inventories the building's major components (roof, elevator, exterior, plumbing risers, garage membrane), estimates remaining life and replacement cost, and compares cash on hand with the "fully funded" balance, the share of each component already worn out. That ratio is percent funded. California requires an annual update with a visual site inspection at least every third year, reported in the Assessment and Reserve Funding Disclosure Summary (Civil Code 5570), a one-page form stating the percent funded figure and any planned special assessments.

The industry benchmark, from Association Reserves' data across tens of thousands of studies: 70% and above is strong, with special assessments rare; 30% to 70% is fair; below 30% is weak, with special assessments common. Two cautions. A young building can be low simply because little has deteriorated yet, so read the funding plan and whether dues have been rising to match. And a study more than three years old, or one done without a site visit, is a red flag on its own.

A quick back-of-envelope: total the components due in the next five years, subtract current reserves plus five years of planned contributions, and if the result is negative that is roughly the assessment coming, split by your unit's percentage interest.

Minutes: where the problems live

Twelve months of board minutes show what the numbers hide. Read for:

• Water intrusion, leaks, mold, balcony and deck waterproofing
• Elevator repairs or modernization bids
• Roof, facade and garage membrane bids
• Soft-story or other seismic work: pre-1978 wood-frame buildings with five or more units and three or more stories are in SF's mandatory retrofit program, and an HOA that has not finished is carrying a six-figure project
• Insurance: non-renewal notices, premium increases, deductible changes, a move to the FAIR Plan
• Delinquencies, owners in foreclosure, disputes with a developer or contractor
• Phrases like "engineering study", "reserve shortfall", "funding options" and "special meeting"

If a problem appears in the minutes but not in the budget or the reserve study, the assessment has not been priced yet. That is your leverage, or your exit.

Litigation, lender approval and owner-occupancy

Fannie Mae and Freddie Mac will not buy loans in a project with pending litigation involving the HOA (narrow exceptions for minor, non-monetary matters), with significant deferred maintenance or unsafe conditions, with a special assessment that the project cannot document as sustainable, or with a budget that puts less than 10% of assessment income into reserves. Commercial space over about 35% of the project and concentrated ownership by a single entity are also disqualifiers. Lenders check this through a project questionnaire the HOA completes.

For a primary-residence conforming loan, owner-occupancy is not usually a hard test, but it matters to many jumbo lenders. If anything above applies you need a portfolio lender; read condo vs house vs TIC and talk to your lender before the offer date.

Master insurance policy: what covers your walls

The HOA's master policy comes in three flavors. "Bare walls" covers the structure to the drywall or studs, leaving interior walls, floors, cabinets and fixtures to your HO-6. "Single entity" covers the unit as originally built but not later upgrades. "All-in" covers the interior too. Your HO-6 dwelling limit has to fill whatever gap the master policy leaves, and your lender will require an HO-6 whenever the master policy does not cover the interior or carries a per-unit deductible.

Read three things on the declarations page: the deductible (a percentage deductible on a large building can be a six-figure number passed to owners as an assessment after a loss, which is what "loss assessment" coverage on your HO-6 is for), whether earthquake is included (usually not), and the renewal date. California's insurance market has pushed some associations into non-renewals or steep increases, and FAIR Plan coverage for an association is costlier and narrower than a standard policy, so a premium shock lands in dues. Homeowners insurance covers the HO-6 shopping itself.

Rental caps, pets, remodels and short-term rentals

Read the CC&Rs and rules for rental minimums and caps (California law limits how far an HOA can restrict rentals, but leases under 30 days can be banned), pet rules, flooring and remodel approval requirements, parking and storage assignments, and move-in fees. San Francisco separately regulates short-term rentals through registration and caps on un-hosted nights; as of 2026-10-24, check the current city rules if that matters to you. None of these are usually deal-breakers, but a rental cap matters if you might move and keep the unit.

Small buildings and self-managed HOAs

Many SF condos are in buildings of two to six units with no professional manager, no formal reserve study and minutes that may not exist. The questions change:

• Who handles the money, and can you see 24 months of bank statements?
• Is there a reserve account at all, and what is in it?
• When were the roof, exterior paint and sewer lateral last done, and who paid?
• Any disputes between owners, and how are decisions made under the CC&Rs?
• Is the building in the soft-story program, and is the work done?
• Who holds the master policy and when does it renew?

Small HOAs can be healthier than large ones, or one difficult neighbor away from paralysis. Meet the other owners if you can.

What to shop for right now

A professional HOA document review is the one service in this article worth shopping. Real estate attorneys, specialized review services and some agents all offer it at very different price points, from a free first pass to a flat fee to hourly billing, and as of 2026-10-24 there is no published benchmark fee to quote. Get two quotes for a flat-fee written review that covers reserves, budget, minutes, insurance, litigation and rules. The fee is small; the five-figure assessment it can catch, or the lender rejection it can predict, is not. Spend the money on a small or troubled HOA, an older building, or any package where the minutes mention the words above; skip it on a large, professionally managed building with a current reserve study above 70% funded and clean minutes.

A one-page HOA scorecard

Two reds, or one red you cannot price, and the building goes in the walk-away pile, however good the unit looks. Confirm the price you will pay for a green building against closed sales in the comps tool, and carry the dues into your monthly number from the true cost of owning.