How HOAs Affect Property Sales in Minnesota: What Homeowners Should Know

Homeowner’s associations, also known as HOAs, are a common feature of Minnesota’s housing stock, particularly in condominiums and planned developments. There are nearly 8,000 HOAs in the state. Whether buying or selling real estate, an HOA will influence the transaction for better or worse. 

Knowing how HOAs affect property ownership and sales is critical. An experienced real estate attorney can help execute your sale by compiling any necessary disclosures, and ensuring all related requirements are met. 

Why an HOA Matters When Selling Property

An HOA is a legal entity that manages aspects of the property under its jurisdiction. Along with maintaining common areas and establishing and enforcing standards (landscaping, exterior appearances), it collects monthly dues from homeowners. It also plans for improvements and levies betterments to pay for them.

An HOA board, made up of elected owners, usually contracts with a management company for day-to-day tasks like hiring contractors, maintenance, and supervising projects. Keeping common areas attractive, enforcing consistent standards, and attention to maintenance make a neighborhood appealing. Many buyers are interested in HOA controlled properties because they outsource much of the work that usually accompanies ownership. 

In mid-2025 the state legislature mandated homeowner access to financial records for all HOAs. Now, HOA boards must provide budgets, reserve-fund balances, and financial statements to allow owners (and, through them, prospective owners) assess the HOA’s financial health as well as the board’s decisions and spending. This is important because capital improvements like replacing old water pipes, paving roads, and repairing storm-damaged buildings are paid for by owners through increased fees and special assessments.

Advantages of ownership in an HOA include:

1. Property values are maintained through community standards and regular maintenance.
2. Outsourcing maintenance like landscaping, painting, and seasonal cleanup reduces burdens on individual owners.
3. The opportunity to examine financial documents used for planning and continuing maintenance provides oversight of the HOA decision making.
4. The costs of improvements and maintenance are spread out over many homes, potentially reducing the total through bulk purchasing.
5. Owners can be as involved as they choose to be, by taking seats on the board, or volunteering to be on committees.

Disadvantages of HOA membership are:

1. Monthly dues can be volatile. Costs associated with things like insuring properties and town- or city-required betterments can cause costs to escalate unexpectedly. 
2. Volunteer boards may not understand maintaining the reserve account or may make mistakes in financial planning. Owners have limited impact on decisions made by their HOA boards regarding hiring contractors, tackling deferred maintenance, and prioritizing issues that require spending.
3. Special assessments like structural repairs to aging buildings, addressing deferred projects, and major repairs can’t always be anticipated. The costs are borne proportionately by owners.
4. Some HOAs have overly-restrictive rules. Beyond landscaping and house color, HOAs can control the type of vehicle you own (motorcycles and pickup trucks are frequently barred), whether you can use a grill in your yard, and the size and type of pet you may keep through their Covenants, Conditions, and Restrictions (CC&Rs).
5. HOA oversight can turn off buyers. A prospective buyer must weigh the benefits of ownership against the CC&R requirements, which often includes HOA approval of the buyer.

Sellers must disclose to potential buyers specific HOA data like monthly dues, pending  actions, insurance documents, lawsuits against the HOA, and a three-year outlook regarding extraordinary expenditures. This is in addition to governing documents, financial statements, and reserve fund information.

Buyers should scrutinize HOA transfer restrictions, CC&Rs, rental restrictions, and other fine print. Factor fees and special assessments into your total cost of ownership before making an offer. There is a 10-day recission period as well as legal relief for any undisclosed special assessments.

Guidance When You Need It

A qualified, experienced real estate attorney from Waypoint Law Firm can help guide your real estate transaction from offer to closing. Contact us for a consultation today.