Buying a South Bay Condo or Townhome? Read the HOA Packet Before You Remove Contingencies

by Ben Larson

(The information below is for reference only based on research and personal experience, it is NOT meant to be legal, financial, or tax advice. I can refer you to any of those professionals so feel free to reach out.)

What should you check in the HOA documents before you remove contingencies?

Read the full HOA disclosure packet before you sign a contingency removal. Focus on the reserve funding, any approved or pending special assessments, the last 12 months of board minutes, the master insurance policy, any litigation notices, and the latest balcony inspection report. If something is missing or unclear, ask for it in writing and, if you need it, for more time. Once you remove the contingency, a surprise in those documents usually becomes your bill.

By Ben Larson | October 23, 2026

In September, ABC7 reported that owners in a 499-unit condo complex in Torrance were each facing a special assessment of more than $49,000. One owner told the station the work included rebuilding the podium, re-piping the property, and repairing the elevators, for a total of about $19 million. The owners have since filed a lawsuit and are working to recall the board.

That is an extreme case, but the pattern is not rare. The HOA attorney ABC7 interviewed, Michael Kushner, said he is seeing a significant increase in special assessments, largely because of rising insurance costs and California's balcony inspection law.

The buyer stories are just as painful. In March, a first-time buyer in California posted on r/HOA that they were told a pending special assessment had not passed. They removed contingencies within the hour, closed, and then learned they owed about $8,000. Another r/FirstTimeHomeBuyer thread is titled, "Bought a condo and found out the HOA is only 1% funded. How screwed are we?"

The good news is that most of these surprises are sitting in the paperwork before you close. Here is how I walk my buyers through the HOA packet so you remove contingencies with your eyes open.

What is in the HOA packet, and when do you get it?

When you buy a condo or townhome in an HOA, California Civil Code Section 4525 requires the seller to give you a specific set of association documents. Once the seller makes a written request, the HOA has 10 days to deliver them, and the seller pays the association's fee. The packet usually includes:

The CC&Rs, bylaws, articles, and operating rules
The annual budget report and reserve disclosures
The current dues, plus any approved changes to assessments that are not yet due
Any notice of violations, unpaid assessments, or construction defect claims
Rental restrictions
Board minutes from the past 12 months, if you ask for them
The most recent balcony and deck inspection report, which is now part of the packet for buildings that require one

In the standard C.A.R. purchase agreement, your review of these documents is its own contingency, and the clock can run longer if the packet arrives late. Check the exact dates in your contract, because they sit alongside your inspection, loan, and appraisal deadlines. My South Bay buyer escrow timeline shows how those dates usually stack up.

Timing matters more right now because you have a little more room to work with. Across the Beach Cities, El Segundo, and the Palos Verdes Peninsula, one local brokerage's October 21 CRMLS pull showed 3.2 months of supply for condos and townhomes, compared with 2.4 months for single-family homes. Whether you are looking at Torrance condos for sale or a townhome in Redondo Beach, use that time for the documents.

Six things I read first in a South Bay HOA packet

1. How well funded are the reserves?

The reserve study estimates what the big items will cost, such as roofs, paint, plumbing, paving, and elevators, and how much the HOA has saved toward them. Look for the "percent funded" figure and the date of the study. Kushner told ABC7 that owners should raise concerns when the percent funded figure falls below 55%. A low number does not automatically mean you should walk away, but it raises the odds of a dues increase or special assessment. Ask whether the board has a plan to catch up. If you are new to how dues and reserves work, start with my overview of what buyers need to know about HOA fees.

2. Are any special assessments approved, pending, or being discussed?

An approved assessment should show up in the disclosures. The harder ones to catch are the projects the board is still talking about. If an assessment is approved before you close, who pays it is something to settle in writing with the seller and escrow. Never rely on a verbal "it didn't pass." Ask for the board's written decision.

3. What do the board minutes say?

Minutes are where problems show up first. Leaks that keep coming back, a bid for re-piping, an insurance renewal that came in high, or a dispute with a contractor all tend to appear in the minutes months before they reach the budget. Request the full 12 months and read them, not just the summary.

4. What does the master insurance policy cover?

Look at who the insurer is, the deductible, and what is excluded. Some California associations have moved to the FAIR Plan with a separate policy for other risks, and earthquake coverage is usually not included. That affects both the dues and what your own unit policy needs to cover. My post on checking insurability before you remove contingencies walks through the questions to ask your insurance agent.

5. Is the balcony inspection done, and what did it find?

California's balcony law (SB 326) requires many condo associations to inspect balconies, decks, and stairways, with the first round due January 1, 2025 and new inspections every nine years after that. Ask whether the inspection is complete, whether it recommended repairs, what those repairs cost, and whether reserves or an assessment will pay for them.

6. Is there litigation, and do the CC&Rs fit your plans?

Check for any lawsuit the HOA is part of, whether it is pending or threatened, and what it is about. Then read the CC&Rs for the rules that affect daily life, such as rentals, pets, parking, and remodeling. Your lender will also review the complex through an HOA questionnaire, so ask your lender early whether anything in the project could slow your loan.

What to do if the packet shows a problem

Finding a red flag does not mean the deal is dead. It means you have a decision to make while you still have options:

Ask for answers in writing. Your agent can send questions through the seller's side to the management company, such as what the reserve plan is or when the assessment vote happens.
Ask for more time. If documents are missing, request a written extension of the HOA review deadline before it passes. Do not remove the contingency and hope.
Renegotiate. A known assessment or a thin reserve can support a credit or a lower price. Decide which one helps you more before you ask.
Cancel inside your contingency period. If the risk is more than you can carry, cancel in writing before you remove the contingency. My post on whether a buyer can back out and keep the deposit explains why timing matters.

If you are looking at new construction, the questions shift a little. Redondo Beach has new townhome communities in the pipeline, including the Toll Brothers project at 122 North Pacific Coast Highway and a 131-townhome plan at 2819 182nd Street. With a brand new HOA, the first-year budget and reserve study are estimates, so ask the builder how they were set and how dues may change once owners take over the board.

Frequently asked questions

How long does a California HOA have to provide the resale documents?

Under Civil Code Section 4530, the association has 10 days after the seller's written request to provide the documents. The seller pays the HOA's fee for preparing them.

Who pays a special assessment that is approved before closing?

It depends on your purchase contract and escrow instructions, and it is often negotiated. Many deals have the seller cover assessments approved before closing, but do not assume it. Put the agreement in writing and confirm it with your escrow officer.

What reserve percentage is a red flag?

There is no single cutoff. One HOA attorney told ABC7 that owners should raise concerns below 55% funded. Look at the trend, the age of the reserve study, and which big projects are coming up in the next few years.

Can I cancel after reading the HOA documents?

If you are still within your HOA document contingency and you follow the contract's cancellation steps, you can generally cancel. After you remove the contingency, your deposit may be at risk, so talk with a real estate attorney if you are unsure.

The bottom line

An HOA packet can look like a stack of paperwork you skim on the way to closing. It is really the financial history of the building you are about to co-own. Read the reserves, the assessments, the minutes, the insurance, the balcony report, and the litigation notes before you sign the removal. If something does not add up, ask, extend, renegotiate, or cancel while you still can.

If you are getting ready to buy, download my South Bay buyer guide. It covers how I plan the contract dates so you have time to review the HOA documents before any deadline hits.

Comparing complexes? Start with these condo and townhome searches

If you want to see what is on the market right now, these are the searches I would start with:

About Ben Larson

Ben Larson leads Larson Realty Group, powered by Real Broker, serving the South Bay of Los Angeles. Licensed since 2006 with more than $100 million in closed sales, he specializes in listings across the Palos Verdes Peninsula and the beach cities, and works extensively with probate, trust, and inherited property sales. Reach him at https://larsonrealty.group. DRE #01746853.