7 Steps to Starting an HOA in a Community
Some community members in a neighborhood may find it’s time to improve community property values and create a homeowners association (HOA) for the greater good of the community.
Obviously, a neighborhood can’t just say “We are now an HOA! Please pay your dues.” There’s a process involved that could take months or even years for a neighborhood to become one.
While we know there are several details between the lines, here’s a closer look at the major steps necessary for starting a new HOA.
Why Should You Start an HOA in Your Community?
If you live in a community that is already beautiful or has absolute potential, it’s always a great idea to start an HOA. Some of the biggest reasons to start an HOA in your neighborhood could be:
- HOA dues help easily maintain home curb appeal
- Property values increase
- Your neighborhood becomes more tempting for the right buyers
- An association actually creates a community where decisions are made to improve the neighborhood for generations to come
- HOAs help maintain shared amenities like community pools and recreation centers
Steps to Starting an HOA
So, you and some neighbors have decided to start an HOA. Here are some of the first big steps you’ll need to take to turn your dream into a reality.
1. Ask About Interest
Just because you want to start an HOA, doesn’t mean the majority of your neighbors are ready for such a big change.
Take some time to test the waters. Create a signature sheet and find out who really wants to become an HOA. Take the time during these conversations to show them the benefits of an HOA and ask them what they’d expect from an HOA if there was one in place.
This approach gets everyone involved and takes any unintentional peer pressure out of the equation.
2. Figure Out Your Community Needs
The whole point of creating an HOA is to improve the overall community. This means finding out what needs to be fixed and prioritizing.
So, take the questions about HOA expectations a step further and create a social media group or pose a question on a site like Nextdoor that gives your neighbors a chance to express the needs they think the community has.
This will put community needs in full focus and give your team a jumping-off point when it comes to making initial proposals for the HOA.
3. Start Researching Local Laws and Procedures
If you’re serious about creating an HOA, it’s necessary to know the local laws and procedures involved. It’s important to know what an HOA can and cannot do within a community.
From general research into nearby CC&Rs to hiring an attorney to help answer questions and serve as your legal representative, this is one of the most important steps to take when starting a new HOA. After all, your time as a board member or leader of your HOA is a volunteer service; you don’t want to spend it fighting avoidable legal battles.
4. Search for HOA Management
Hiring an HOA management company to help your board is one of the most beneficial steps you can take when starting an HOA.
Management companies have seen all the ups and downs your association project may experience. Even though you and your neighbors are passionate about creating an HOA, you’ll still need the experience an association management company has to create the framework of a great association.
We have the expertise on our teams to help potential associations:
- Plan their initial budget
- Examine vendor possibilities
- Find insurance that the association will need
- Plan the structure of their association
- Determine the dues and fees necessary for successful operations
5. Create Your CC&Rs
Your community’s by-laws and CC&Rs are the literal blueprints that detail how your community is to be run over the years.
Work with your management team and general startup committee to determine fair, effective rules that HOA members will need to abide by.
Keep in mind that your CC&Rs must be detailed and cover every possible curveball that could be thrown at a Board in the future. The CC&Rs will be the end-all resource for all community issues because it is the official determination of how the community should successfully be run.
6. Create an LLC
Once all the details have been ironed out, now’s the time to turn your idea into a full-blown business. Your management team can help guide you through the process of creating an LLC, paying essential fees, and most importantly, coming up with an original name for your HOA.
7. Elect Your Board
Finally, it’s time to elect your Board of Directors! Remember, this initial board is especially important because it sets the tone for your association and election process right out of the gate.
Ensure that your election processes follow all guidelines laid out in the CC&Rs, and lay out a smooth election experience that is fair and balanced.
So, when accepting nominations for board members, make sure to look for the following qualifications:
- Strong skills in different areas pertaining to the association (i.e. finance, technology, business)
- Team players
- Passionate about improving the community
Start Your HOA Off On the Right Foot With Excel Association Management
At Excel Association Management, helping new HOA communities grow is our bread and butter. For decades, we have assisted board members with behind-the-scenes decisions and helped keep community projects running smoothly for the betterment of an association.
We know how important your community is to you, and that’s why we put your association’s needs first. Contact us today to learn more about our services and how we can help turn your budding idea into a blooming HOA.