A new product has recently become available to some North Carolina purchasers buying homes or condos in community associations. Known as “HOA Warranty,” this is a private, optional product offered at closing and is not governmental or legislative in any way. Because it is new to the North Carolina market, we want to make readers aware that it exists, not to recommend for or against its use.
You can learn more about the product directly from the provider at HOA Warranty: Special Assessment Protection.
What the Product Is Intended to Do
The general purpose of the HOA Warranty product is to provide buyers with some protection against unexpected special assessments during the early years of ownership. For a payment made at closing, the product is marketed as offering peace of mind if a special assessment is imposed shortly after purchase. This may be of interest to some buyers, particularly in older communities or associations where reserve funding is a concern.
We have been aware of this product since it was first offered last year. We have not personally seen it used, but since it would be purchased by a buyer at closing, we would not necessarily be in a position to know when or how often it is used.
Why Some Buyers May Decide They Do Not Need It
Not every buyer will need or want an additional product like this. In many cases, the risk of a special assessment can be evaluated through reasonable due diligence. North Carolina already requires sellers to complete a Residential Property and Owners’ Association Disclosure Statement, which asks whether there are any approved changes to dues, fees, or special assessments and, if so, requires disclosure of the nature and amount.
Buyers who carefully review that disclosure and ask questions about reserves, recent repairs, and planned projects may decide that this type of product does not add meaningful value for their situation.
No Recommendation, Just Information
At this point, we are not pro or con on this product. There is not enough history or firsthand experience to draw firm conclusions. Like any insurance or warranty-type product, there will likely be situations where it makes sense and others where it does not. That decision will depend on a buyer’s concerns, tolerance for risk, desire for peace of mind, and willingness to conduct their own due diligence.
Because this is a new option for North Carolina purchasers, we simply want to note that it is available. Anyone interested should review the product carefully, understand its terms and limits, and draw their own conclusions about whether it fits their specific circumstances.