For some peculiar reason, the "cut-off" point for forming an HOA in California is 5 units or more. Thus, a community with only four (4) homes will probably not have an HOA, while a similar community with 5 units will be controlled by a homeowners association. If there is no HOA, each owner will be required to agree at sale to a binding "Maintenance Agreement" intended to address and prevent--as another agent noted--disputes arising from necessary property repairs and improvements. Maintenance agreements usually provide each owner with guidelines as to how to determine what repairs are to be discussed by the four owners and what is the responsibility of just the one owner, and how community repairs will be decided and paid by the members. The Maintenance Agreement will also provide for necessary easement rights across the property to ensure that owners who need access, for example, in the backyard of the downstairs neighbor to change a water line will always be guaranteed that access.
Personally, there are many smaller commnities that operate well without an HOA. The only real difference between the HOA and the non-HOA is that the HOA will have "reserves" (funds paid and set aside by the members to cover larger repairs) and the non-HOA community will have to pay for all repairs as they come up without benefit of any "savings" created by the HOA to cover those costs. To determine if buying in this community is a good idea, work with your Realtor to determine the overall condition of the building and then talk with each of the other four unit owners to see the individuals seem reasonable enough for you to consider working with them in maintaining the building.
As for forming your own HOA, if you and the other three homeowners decide that you would prefer to have an HOA, which, in California, is most often a non-profit mutual benefit corporation, you will need to speak with an attorney to set this up. The attorney will help incorporate the homeowners association, create a set of governing documents (Articles, Bylaws and CC&Rs) and will help locate a budget preparer to determine both the operating expenses and reserve requirements for the homeowners association. In all, the cost should not exceed $5-6,000. Please do NOT attempt to use the documents from http://www.condocerts.com to "forge" a set of governing documents for your HOA. As someone who assisted in writing these documents with attorneys for years, these are NOT "cookie cutter" documents, and must be specifically tailored to the needs of your homeowners association. Often the governing documents on condocerts.com is out of date or contains information that would not apply or might detriment your membership. Always consult a qualified real estate attorney if you wish to incorporate the homeowners association and create a properly run HOA.
Grace Morioka, SRES, e-Pro, CID/HOA Specialist
Co-Author, "Homeowners Associations: A Guide to Leadership and Effective Participation" with industry leader and attorney John Paul Hanna.
Area Pro Realty
San Jose, CA
i think the cost to obtain the HOA docs varies as they are usually provided without charge here in my part of Ohio if an HOA exists. Does the agent know if there is an HOA? Just had a closing where I was the selling agent and the HOA was managed by volunteer owners of a small condo complex- not as smooth as in a large complex but these owners did a pretty fair job of management. One of the HOA reps was a real estate broker, however, which helped as she understood how properties were bought and sold. Good luck and I hope this works out for you!
You may be able to buy HOA documents online at http://www.condocerts.com
In many cases where there are few homeowners a coop may be formed instead of an HOA. You are looking at thousands of dollars to form this kind of venture. If this property does not have an assocition or coop in place purchasing it would likely be a nightmare unless provisions are made to handle repairs, property taxes, insurance, master policies, easement issues, etc. I would investigate this very carefully before you proceed.
I despise the concept of HOA's. But if you have several different people living in the same buliding which will need repairs (multiple) over time it makes sense to have someone who has put money together for future repairs. If this does not happen suddenly everyone in the building (being fair) would have to suddenly come up with $5,000 when something ($20,000) goes wrong with the building. But as you know, many people now have a very hard time meeting their mortgage payment, so any extra amount is impossible for them to come up with. A well run HOA would have reserves for such occurances, but not all HOA's are well run.
As far as a HOA for a single house, I will ALWAYS see it as a bad idea. But when you share the same walls, foundation, and roof with others you need something to make sure repairs are done to keep your living space in the air instead of falling into the cellar.