HOA 2

Forming a Home Owner’s Association in a New Community

What is AN HOA

A Home Owners’ Association is a “small government” within neighborhoods that works to maintain the integrity and structure of the living space

Helps to maintain a higher quality of life

Brings community together

Makes neighborhood more aesthetically pleasing

Steps to Forming An HOA

Create Interest

• Meet with a select few residents to discuss how to form HOA
• Conduct a survey in the neighborhood to see where interests lie

What services would residents like to have?

Would they be interested in an HOA?

What structures would residents like to see maintained/changed?

Learning the Rules

• Different states have different requirements and laws to form HOA

Is a petition needed?

Are all residents required to join?

Is hiring a real estate attorney necessary?

First Meeting

Create a name!

*you cannot submit official paperwork without having a name*

Vote For Leadership Positions

Form Committees

Establish when and where meetings will be held

• Biweekly, monthLY
• Parks, houses, restaurants

Meetings

How will residents be notified of meetings and policies?

• Email, mail, newsletter, website

Enforce rules for the community

• How often lawns should be maintained
• What color schemes are allowed for house exteriors
• Designated parking areas for visitors

Create punishments and fines for breaking rules

Leadership Position

Treasurer

Vice President

Secretary

President

• Takes over when president is away
• Helps insure that meetings are running smoothly

• Mediates meetings
• Announces final decisions
• Calls for voting

• Handles money
• Collects payments from community
• Keeps records of money spent on projects

• Keeps official records of meetings
• In charge of notifying community
• Makes sure association meets all legal requirements in documents

Committees

Internal affairs

Neighborhood affairs

• Traffic safety
• Law enforcement
• Housing conditions
• Community service

• Fund raising
• Publicity
• Social events

Project Ideas

Landscaping

Community High-speed Internet

Garbage And Recycling Pick Up

Community Pool

Clubhouse

Parks & Playgrounds

Budgeting

• Establish a budget for certain projects
• Keep a separate budget for emergencies

Natural disasters, vandalism, electrical problems

• Have residents pay a monthly fee to participate in HOA
• Create consequences for late payments

Late fees, legal action, foreclosing homes

• Make elected treasurer in charge of collecting payments and handling money

Forming An LLC

Choose a registered agent in the state

Apply for a federal tax number

Draft and file Articles of Organization

Pay required fees

Creating an LLC establishes that the HOA is seen as an official business structure

Establishing a Legal Entity

• Review state law and local ordinances to determine what legal requirements that you must meet.

• Begin by reviewing your state’s property codes

• You can review most state’s laws online

• Once you have located the appropriate law, do a keyword search for “homeowners association.

• States may have laws that govern the way that HOAs must be formed

Articles of Organization

Document that provides basic info about HOA

• Business name and address
• Registered agent’s name and address
• Names of organizers of LLC
• Basic info about management structure & description

-Purpose, people in power, plans

Disadvantages

Monthly Fees

Constant Maintenance

Discourages Families From Moving Into Neighborhood

Creates Neighbor Disputes

Punishments

• Late fees, legal action, foreclosed homes

Advantages

Increase in property value

Amenities

• Pools, parks, maintenance, protective gates

Community bonding

Aesthetically pleasing neighborhood

Good mediator for neighbor disputes