Should our HOA buy the vacant lot or land next to the neighborhood?

By OurHOA · General information · Revised November 9, 2026

How an HOA board decides whether to buy a vacant lot or adjacent land: owner votes, funding, environmental checks, property tax, title and a sample motion.

Part of the HOA board handbook: running the board.

The short answer

Buy only if owning the land solves a problem you can name, the governing documents allow it, and the owners have agreed to pay for it. Most boards get here because a tract next door came up for sale and someone fears what a builder might do with it. That fear is fair, but a deed is the most expensive answer to it. Before signing, read the declaration for a purchase vote, price the land plus what it costs to carry each year, check title and environmental history, and put the money question to the owners even if no statute makes you. Rules vary by state and by your documents. This guide is general education, not legal advice, and a land purchase is worth paying a real estate attorney to review.

Write down what the land is for

Finish this sentence in the minutes: 'The association wants this land in order to ___.' Overflow parking, a buffer of trees, a second entrance and control of the pipe your pond drains through are all real answers. 'So nobody else gets it' is weak, and it causes tax trouble later. Then price the cheaper tools. A seller may take money for a recorded restriction on the tract, or a conservation easement, and keep the land. A right of first refusal usually costs far less than the land and buys time. A few abutting owners may want to buy it themselves. If the threat is a zoning change, our guide on responding to a rezoning proposal next to an HOA covers what the board can do for the cost of a few letters.

Find out who gets to say yes

Search the declaration, bylaws and articles for acquire, purchase, real property and capital. Many declarations cap what the board can spend on new capital items without an owner vote. State law then sets the floor. Texas. Business Organizations Code 2.101(3) gives an entity the power to acquire and own property. In a subdivision, Property Code 209.0051(h) bars the board from voting on the purchase of real property except at an open meeting with notice to owners. Item 12 on that list is the purchase, item 6 is a special assessment and item 9 is borrowing. Condominium boards have the power in 82.102(a)(9) unless the declaration says otherwise. Florida. Section 617.0302(8) lets a nonprofit corporation buy real property unless its articles or bylaws say otherwise, and we found no owner vote for land purchases in Chapter 720, so an HOA's documents control. Condominiums are stricter. Under 718.111(7)(a), an association buys real property only as the declaration provides, and if it is silent, with approval of 75 percent of all voting interests. Colorado. C.R.S. 38-33.3-302(1)(h) lets an association acquire real property without specific authorization in the declaration, subject to what the declaration does say. Section 38-33.3-117(1)(i) leaves that paragraph off the list for communities created before July 1, 1992, so older communities should read their documents and, if incorporated, the nonprofit act at 7-123-102(1)(d). If the seller is a director or a director's business, that director leaves the room. Florida 720.3033(2) requires disclosure in the minutes and a two-thirds vote of directors present, and any member can move at the next members' meeting to cancel the deal, which takes a majority of members present.

Price the first year and every year after

Here is an invented example. An 80-home association looks at a $240,000 tract. Survey, environmental report, title, recording and attorney time add $12,000 in this example, so the total is $252,000, or $3,150 per home. Brush cutting, added liability premium and property tax come to $9,600 a year, or $120 per home, forever. Get real quotes, and show owners both numbers. There are three ways to pay. A special assessment is the cleanest, and our guide on how to levy an HOA special assessment covers the mechanics. Florida 720.303(2)(c)2 says an assessment cannot be levied at a board meeting unless the notice states that assessments will be considered and their nature. A bank loan spreads the cost, but it adds interest and possibly a pledge of assessment income. Reserves are the worst choice, because the roof and the pond still need that money. In Florida, 720.303(6)(h) requires an advance majority vote at a meeting with a quorum before reserves go to another purpose.

Use an option period to check the land

Do not sign a plain purchase contract. Ask for 60 to 90 days to inspect, a refundable deposit, and a closing that depends on owner approval if you plan a vote. Then order these. - Title commitment and owner's policy. Read every exception, including old easements, unpaid taxes, liens and any covenants already on the land. - Survey. It shows the real boundaries, encroachments and whether the tract has legal access. - Environmental report. Under 42 U.S.C. 9601(40), a buyer's defense to federal cleanup liability depends in part on making all appropriate inquiries before closing. Under 40 CFR 312.20, that work must fall within one year before acquisition, and the interviews, lien searches, records review, site visit and environmental professional's declaration must be done or updated within 180 days. EPA accepts a Phase I report under ASTM E1527-21, or E2247-23 for forest or rural land. Empty fields can hide old dumps, tanks and farm chemicals. Skip this and the association may be buying someone else's cleanup bill. - Flood and wetlands. Check FEMA's flood map. Clean Water Act Section 404 requires a permit before fill goes into wetlands or other waters of the United States, which can kill a parking lot plan. - Zoning. Ask the city or county in writing whether your intended use is allowed.

Do not assume the land escapes property tax

Common area usually carries little tax of its own, but a newly bought tract may not qualify at first. Texas. Tax Code 23.18(b) gives nominal value only if the property is held for all members equally and each member has a nonrevokable right to use it, attached to the member's lot. If the tract carries agricultural valuation, 23.55 adds tax for the three prior years when the use changes, and a lien attaches to the land. Make the seller answer for that in the contract. Florida. Section 193.0235 folds into the lots a parcel designated as common on the plat or site plan. Land off the plat qualifies under (2)(d) only after 10 years of exclusive use by lot owners in the same county, so expect a tax bill until then. Colorado. C.R.S. 38-33.3-105(2) spreads common element value across the units, but 38-33.3-103(5)(b) defines a planned community's common elements as real estate within the community. A tract outside your declared boundaries is not there yet. Bringing it in usually takes a declaration amendment and a recorded supplement. Think before you annex. In Colorado, selling a common element later takes 67 percent of the votes under 38-33.3-312(1), so a board that may want to resell should get advice first.

Ask your CPA about the 90 percent test

Form 1120-H requires that 90 percent of the year's spending go to acquiring, building, managing and caring for association property, under 26 U.S.C. 528(c)(1)(C). Capital spending counts under Treasury Regulation 1.528-6(b). But Regulation 1.528-3(a) says the property must be available for the common benefit of all members and tend to enhance their enjoyment of their homes. Land leased mainly to nonmembers does not qualify. A purchase can be larger than a whole year's dues, so if it fails that definition, the association can fail the test for that year. Have the CPA read your statement of purpose before closing, and ask how any hay lease, billboard or cell site rent would be taxed.

Take it to the owners

Hold a vote even when nothing requires one. Owners are paying, and a purchase most of them voted for is harder to attack later. Send a packet with a map, the price, the per-home cost, the yearly carrying cost, the cheaper options you rejected and a summary of the inspection results. Ballot wording: 'Do you approve buying the 3.2-acre tract at the north entrance for $240,000, to be kept as a tree buffer, paid for by a one-time special assessment of $3,150 per home due by June 1?' If the lot sits inside the community and carries dues, tell owners the budget loses that lot's dues from an outside payer while the association owns it, so the other lots carry the share unless your documents say otherwise. In Colorado, 38-33.3-310(4) also bars casting votes allocated to a unit the association owns.

Sample motion and timeline

Motion: 'I move that the association sign the attached purchase agreement for the tract described in Exhibit A at a price of $240,000, with a $5,000 refundable deposit from operating funds, conditioned on an acceptable title commitment, survey and Phase I report and on approval by owners under Article __. The president may sign, and no director has a financial interest in the sale.' Week 1: the board writes the purpose and reads the documents. Weeks 2 to 3: attorney review and contract with an inspection period. Weeks 3 to 9: title, survey, Phase I and CPA review. Week 10: board reviews results and sets the vote. Weeks 11 to 13: town hall and ballot. Week 15: closing, with title in the association's exact legal name. On closing day, have the insurance agent add the parcel to the liability policy, record the deed, and add the land to your asset list and reserve study. Never let a director hold title personally.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

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