A few years back I had a client buying a condo in South Scottsdale. Great unit, great price, HOA dues that looked completely normal at $310 a month. Three months after she closed, every owner in the building got a letter: $14,200 special assessment for a roof and deck replacement, due in two installments. That assessment wasn’t a surprise to the board — it had been discussed in meeting minutes for over a year, and the reserve study had flagged the roof as past its useful life. It was only a surprise to her, because nobody ever read the documents.
That’s the whole reason I push clients hard on the HOA review. In Arizona you get a disclosure packet and a short window to read it, and most buyers spend that window picking paint colors instead. Here’s exactly what I look at, in what order, and what makes me tell a client to walk.
What You Actually Receive, and How Long You Have
When you buy a resale home in an Arizona planned community or condominium, the seller is required to deliver an HOA disclosure packet through the association. As of the law that took effect September 12, 2026, that packet is meaningfully thicker than it used to be — it now has to include board meeting minutes, association financials, open violations on the property, and insurance certificates, not just the CC&Rs and a dues figure. I wrote about that change in detail in my post on Arizona’s new HOA laws effective September 2026.
The important part: once you receive it, the clock is short. Under current statute a purchaser has roughly five days after receiving the association information to rescind, and your purchase contract has its own inspection-period deadlines running at the same time. Confirm your exact dates with your agent the day the packet lands — don’t assume you have the full ten-day inspection period to think about it.
Document 1: The Annual Budget
Start with the operating budget, because it tells you whether the dues you’re being quoted are actually covering the community’s costs. I’m reading for three things.
- Is it balanced? If projected expenses exceed projected revenue, that gap gets closed eventually — through a dues increase, a special assessment, or deferred maintenance that becomes a bigger bill later.
- How much goes to reserves? A healthy Arizona association is typically moving somewhere in the range of 15-30% of dues into the reserve fund. If the reserve contribution line is tiny or zero, the community is running on fumes.
- What’s the dues history? Ask for three years. Dues that jumped 20% in a single year usually mean the association got surprised by something — insurance, water, or a repair they hadn’t funded.
In the Valley, watch the water and landscaping lines specifically. Communities with large turf areas, water features, or aging irrigation have seen those costs climb fast, and that pressure lands on dues.
Document 2: The Reserve Study
This is the single most useful document in the packet and the one buyers skip most often. A reserve study is an engineer’s inventory of every major component the association owns — roofs, private streets, pool equipment, elevators, paint, perimeter walls — with the remaining useful life of each and what it will cost to replace.
The number everyone quotes is percent funded: the reserve balance divided by what the study says should be on hand at this point in the components’ lives.
- 70% funded or better — generally strong. Special assessment risk is low.
- 30-70% funded — the common middle. Not a dealbreaker, but read the funding plan to see whether it’s climbing or sliding.
- Under 30% funded — elevated risk. If a big-ticket component is also near the end of its life, an assessment or a sharp dues increase is a question of when, not if.
Then look past the percentage at the timeline. A community that’s 55% funded with no major component due for fifteen years is in far better shape than one that’s 65% funded with a roof replacement scheduled for next year. Match the balance against what’s coming due in the next three to five years.
One more thing: check the date on the study. An Arizona reserve study built on pre-2021 construction pricing is understating what those repairs cost today, sometimes badly.
Document 3: Board Meeting Minutes
Minutes are where the truth shows up before it shows up in a bill. Read at least twelve months of them, and read the ones for the last two or three meetings especially carefully. You’re looking for:
- Discussion of upcoming projects, bids solicited, or engineering reports ordered
- The words “special assessment,” “loan,” “line of credit,” or “dues increase” in any context
- Litigation — against a builder, a vendor, an insurer, or an owner
- Insurance renewal conversations, especially anything about deductibles or carriers declining to renew
- Board turnover, resignations, or a management company change
My Scottsdale client’s $14,200 assessment was in those minutes for four straight meetings before she ever wrote an offer. Nobody was hiding it.
Document 4: Insurance Certificates
This matters more for condos and attached homes than for a detached house in a planned community, but it matters everywhere now. Arizona associations have been hit with the same hard insurance market as the rest of the country, and the two things I want to see are the master policy deductible and whether the association carries adequate coverage for the structure.
On a condo, a master policy with a very high deductible can push a surprising amount of repair cost back onto individual owners after a loss — which is why your own HO-6 walls-in policy and its loss-assessment coverage need to be sized to the association’s deductible, not guessed at. Get a quote from your insurance agent during the inspection period, and hand them the master certificate so the numbers line up. I cover the wider cost picture in my post on closing costs in Arizona.
Special Assessments: Past, Present, and Pending
Ask three separate questions, because associations answer them differently:
- Is there a current assessment on this unit? If yes, find out whether the seller is paying it off at closing or whether the balance transfers to you. Put the answer in writing in the contract.
- Has the association levied an assessment in the last five years? A pattern of assessments tells you reserves are chronically underfunded.
- Is one under discussion? This is where the minutes and the reserve study together give you a better answer than the disclosure form will.
Red Flags That Make Me Slow a Client Down
- Reserves under 30% funded with major components near end of life
- A reserve study more than five years old, or none at all
- Active litigation, particularly construction-defect claims
- High owner delinquency — if a large share of owners aren’t paying dues, the rest absorb it
- A high percentage of rentals in a condo project, which can also affect your loan options
- Minutes showing repeated deferral of the same repair
- An association that is slow, vague, or charges unusual fees to produce the packet
None of these automatically kills a deal. A community with a known, funded, scheduled project can be a perfectly good buy — you just want to price it in, or negotiate a credit, rather than find out afterward.
Condos and Attached Homes Deserve Extra Scrutiny
In a detached single-family planned community, the association typically maintains common areas, entry monuments, and maybe private streets — real money, but bounded. In a condo or townhome project, the association owns the roofs, the exteriors, the plumbing in the walls in some cases, and often the parking structure. Your exposure to their financial decisions is much larger, and so is the payoff for reading carefully. If you’re buying a Scottsdale or Tempe condo, treat the reserve study as seriously as the home inspection — and still get the home inspection.
How to Fit This Into the Inspection Period
Here’s the timeline I run with clients:
- Day 1: Request the HOA packet immediately at contract acceptance — don’t wait for the title company to nudge it along. Delays here eat your review window.
- Days 1-3: Budget, reserve study, and dues history. This is where most deal-relevant information lives.
- Days 3-5: Minutes and insurance certificates. Send the master certificate to your insurance agent for an HO-6 quote if it’s a condo.
- By day 5: Decide. If something’s unclear, ask the management company a direct written question — a vague answer is itself an answer.
Budget about two hours of real reading. I go through it with my clients, and if something in a reserve study is over my head, I’d rather pay a CPA or an engineer a small fee for an hour of review than let a buyer walk into a five-figure surprise.
The Bottom Line
An HOA’s financial condition is part of the price of the home, even though it never shows up on the purchase contract. Read the budget, the reserve study, twelve months of minutes, and the insurance certificate — in that order — inside the first few days of your inspection period. Communities with strong reserves protect your resale value. Communities without them send you a bill.
If you’re under contract in a Phoenix-area community and want a second set of eyes on the packet, call me at (480) 201-3700 or reach out at https://mikecaruso.idxbroker.com/idx/contact. I’ve read a lot of these, and it takes about twenty minutes to spot whether something needs a harder look.
Mike Caruso | HomeSmart Elite, Chandler AZ | License SA540586000 | 22+ years | 500+ homes sold
FAQ
What percent funded should an Arizona HOA’s reserves be? 70% or higher is generally considered strong, 30-70% is the common middle range, and under 30% signals elevated special assessment risk. Read the percentage alongside the timeline of upcoming repairs — a moderately funded association with no major projects due for a decade is safer than a better-funded one facing a roof replacement next year.
Can I cancel a home purchase after reading the HOA documents in Arizona? Yes, within a limited window. Arizona statute gives a purchaser a short rescission period — currently about five days after receiving the association information — and your purchase contract’s inspection period provides its own cancellation rights. Confirm both deadlines with your agent the day the packet arrives, because they run at the same time.
Do I have to pay a special assessment the seller already knew about? It depends on how the assessment was levied and what your contract says. If an assessment has been formally levied before closing, it is normally negotiated as a seller obligation, but an assessment approved after you close is yours. Get the answer in writing from the management company and have your agent address it in the contract rather than assuming.
