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OA Warranty, a startup founded by Chicago Realtor Rhett Graves, aims to alleviate concerns about special assessments in buildings with low homeowners association (HOA) reserves. This issue affects an estimated 70% of the 369,000 HOAs operating in the U.S., which can lead to postponed maintenance and surprise costs for homeowners.

    Graves' company offers a safeguard against unexpected assessment fees, providing buyers and sellers with protection against costly repairs that can deplete reserve funds. For instance, Chicago Realtor Tori Gwin's client struggled to sell their unit due to the HOA's $2,000 reserves, which gave potential buyers pause. To reassure them, Gwin purchased a three-year warranty from HOA Warranty for $800, and the deal closed on June 23.

    HOA Warranty seeks to address a widespread problem that can stall or derail sales. Graves launched the company after witnessing many deals fall apart due to concerns over surprise HOA assessments. The startup offers coverage options ranging from one to three years, with costs between $380 and $800, covering up to $10,000 for a single event.

    The product is currently available in six states – Illinois, Indiana, Michigan, North Carolina, Ohio, and Pennsylvania – and will expand into other areas soon. HOA Warranty operates on the principle that buyers expect the worst, while sellers assume the best, creating a gap that can be bridged with a safety net for buyers.

    The market for this product could be substantial, given the 369,000 community associations in the U.S., representing nearly 29 million housing units. Regular dues are meant to cover maintenance and reserve funds, but unexpected repairs or disasters can quickly drain money, forcing HOAs to levy special assessments. Approximately 70% of HOAs lack sufficient reserves, increasing the risk of special assessments and deferred maintenance.

    Graves hopes his product will facilitate sales even in challenging scenarios by providing a safety net for buyers and giving sellers confidence that they can close deals.