What to know about the HOA before you sign on a brand new home
When you buy a new home in a planned community, you're buying more than a house. You're often joining a homeowners association too. And in a brand new community, that HOA is usually still taking shape. The builder may be running it. The budget may be based on estimates. And the rules may still be new to everyone.
I help a lot of buyers purchase new construction around the Sacramento region, and HOA questions come up every time. Understanding new construction HOA fees and structures before you sign can save you from surprises later. Here's what I walk my clients through.
What an HOA Does in a New Community
A homeowners association manages the shared parts of a community. Depending on the neighborhood, that might include parks, landscaping along main streets, walls and entry features, pools, clubhouses, private roads, or gates. The HOA collects dues from owners to pay for upkeep, insurance, management, and long-term repairs.
The HOA also enforces the community's rules. These are written in a document called the CC&Rs, short for covenants, conditions, and restrictions. Rules often cover exterior paint colors, fencing, landscaping, parking, and changes like solar or patio covers.
In California, most HOAs are governed by the Davis-Stirling Common Interest Development Act. It sets rules for how associations hold meetings, manage money, and share information with owners.
Who Runs the HOA at First?
This is the part many buyers don't expect. In a new community, the builder usually controls the HOA in the beginning. Builder representatives often serve as the first board members. The builder may also hold extra voting power while homes are still being sold.
That's normal. Someone has to set things up before there are owners to take over. Over time, as more homes close, control shifts to the homeowners. According to the California Department of Real Estate's buyer guide, owners must be able to elect at least one board member within six months after the first home is sold.
This transition matters. Once owners are in charge, they set the budget, hire management, and decide on future projects. Getting involved early helps you understand where the association is headed.
How HOA Dues Are Set in a New Build Community
In a new community, the first budget is based on projections. The builder estimates what it will cost to maintain the common areas once everything is finished. Those estimates are often reviewed as part of the state approval process, but they're still estimates.
Here's something to watch for. Builders sometimes subsidize the HOA during the early sales period. That can keep dues lower at first. When the subsidy ends, or when more amenities come online, dues may go up. The DRE guide notes that assessments may rise when a developer's subsidy program ends.
When you're comparing communities, ask:
- What are the current monthly dues, and what do they cover?
- Is the builder subsidizing the budget right now?
- Are more amenities still planned, and will they add costs?
- How much is being set aside for future repairs?
- Have dues changed since the first homes closed?
The Public Report and Other Documents to Read
In California, many new subdivisions require a public report from the Department of Real Estate. It summarizes key facts about the project, including the HOA, title matters, and the purchase terms. The DRE requires the builder to give you a copy before you sign a purchase contract. You can learn more on the DRE's public reports page.
Along with the public report, ask for and read:
- The CC&Rs. These are the core rules for the community.
- The bylaws. These explain how the HOA operates and how votes work.
- The budget. This shows where your dues go.
- Any reserve study. This estimates long-term repair needs and funding.
- Architectural guidelines. These explain what changes you can make to your home and how to get approval.
I know it's a lot of reading. But these documents tell you how you'll live in the community for years. It's worth the time.
Master Associations and Sub-Associations
Some large planned communities have more than one layer of HOA. A master association may manage community-wide features like parks, trails, and main entries. A smaller sub-association might manage a specific neighborhood, such as a gated village or a group of homes with shared landscaping.
If a home is in both, you'll pay dues to both. Each has its own budget and rules. Make sure you know every association a home belongs to and what each one charges.
HOA Fees vs. Special Taxes
HOA dues are not the only extra cost in many new communities. Some newer neighborhoods are also part of community facilities districts, often called Mello-Roos. These add a special tax to your property tax bill to help pay for roads, parks, or other infrastructure.
Mello-Roos and HOA dues are separate. One goes to the HOA. The other goes on your tax bill. When you're budgeting for a new home, include both so you see the full monthly cost. My guide to builder incentives also covers how to factor these costs into your decision.
Why Reserves Matter, Even in a New Community
When everything is brand new, it's easy to assume repairs are far off. In many ways they are. But a healthy HOA starts saving from day one. That savings account is called the reserve fund.
Reserves pay for big, predictable expenses down the road. Think pool resurfacing, repainting walls and fences, replacing play equipment, or repaving private streets. A reserve study estimates when those costs will come up and how much the HOA should set aside each year.
If reserves are underfunded, owners may face a special assessment later. That's a one-time charge to cover a shortfall. It doesn't happen in every community, but it's worth understanding the plan. When you review the budget, look at how much of each month's dues goes into reserves. Ask whether the plan is based on a professional reserve study.
Good reserves protect your home's value. They keep the community looking cared for, and they help avoid sudden costs for owners.
Living With an HOA: The Practical Side
An HOA can add real value. Well-kept common areas, consistent curb appeal, and shared amenities are big reasons people choose planned communities. But it helps to go in with realistic expectations.
Approvals take time. Want to add a patio cover, change your landscaping, or paint your front door? You may need approval first. Plan ahead.
Rules apply to everyone. Parking, trash cans, and front yard upkeep are common rule areas. Read them so you know what's expected.
Meetings matter. Board meetings are where budgets and projects are decided. Attending a few helps you stay informed.
Practical Steps Before You Buy
- Ask for the HOA documents early. Don't wait until the end of escrow.
- Add up every monthly cost. Include HOA dues, any sub-association dues, and special taxes.
- Ask about subsidies and future amenities. Know what could change your dues.
- Review the rules that matter to you. Pets, parking, solar, and backyard projects are common ones.
- Have your own representation. Builder sales reps work for the builder. Your own agent can help you compare communities and ask the hard questions.
HOAs are a big part of life in many new build communities. When you understand how they work, you can choose a community that fits your budget and the way you want to live. If you're exploring new construction around Sacramento and want help reviewing HOA details, I'd be glad to help. My guides to new construction vs. resale and the new construction walkthrough are good next reads, or you can reach out anytime.
Frequently Asked Questions
Do new construction homes have HOA fees?
Many new construction homes in planned communities have HOA fees. The dues pay for shared areas such as parks, landscaping, pools, or gates. Some communities also have special taxes, such as Mello-Roos, that are separate from HOA dues.
Who controls the HOA in a new community?
The builder usually controls the HOA at first, with builder representatives serving on the board. Control shifts to homeowners as more homes are sold. In California, owners must be able to elect at least one board member within six months after the first home is sold.
Can HOA fees go up after I buy a new home?
Yes, HOA fees can change. In new communities, dues may rise when a builder subsidy ends, when new amenities open, or when the owner-led board updates the budget. Ask about subsidies and planned amenities before you buy.
What is a public report for new homes in California?
A public report is a document issued by the California Department of Real Estate that summarizes key facts about a new subdivision, including HOA details and title matters. The builder must give buyers a copy before they sign a purchase contract.
What is the difference between HOA fees and Mello-Roos?
HOA fees are paid to the homeowners association for shared community upkeep. Mello-Roos is a special tax added to the property tax bill to help fund infrastructure. A home can have one, both, or neither.
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