BlogOrganizational Management How to Start an HOA in 13 Steps: Top Strategies, Key Documents & FAQ Organizational Management How to Start an HOA in 13 Steps: Top Strategies, Key Documents & FAQ Author: Marlena Moore January 16, 2024 Contents 🕑 9 min read Creating an HOA can be a rewarding endeavor that truly benefits every part of your neighborhood’s community. Whether you’re a homeowner looking to establish one in your existing neighborhood or a developer aiming to create a well-organized community, this comprehensive guide will walk you through all things needed for a successful HOA. We’ll cover the key considerations, legalities, financials and best practices. What is an HOA? An HOA, simply put, is a homeowner’s association. This is an organization within a subdivision, planned community or condominium building that creates and enforces rules for the community and the residents. Those who own property within these communities will pay yearly or monthly dues, also known as HOA fees. These fees help pay for amenities, operating expenses and sometimes utilities. But the real answer you’re looking for is what does it actually do for a community? An HOA fosters a sense of community, enhances property values and provides residents with a platform to actively participate in neighborhood decisions. Why do HOAs Exist? HOAs exist largely to maintain and enhance the quality of life of the residents in a community by establishing and enforcing rules and regulations. HOAs bring the following key things: Manage communal maintenance: Many communities with an HOA may have a shared swimming pool, tennis court, parking lot, dog park or party space that residents are allowed to use. The HOA and its fees pay for the maintenance of these resources so everyone can enjoy them. Raises property value: By providing and maintaining amenities, the value of each property within an HOA community is higher. An HOA will work hard to maintain the overall upkeep of a community as well, making it a more desirable place for people to live, keeping property values high. Manage neighbor disputes: Within an HOA, there is a clear set of rules and regulations that residents must abide by. With these regulations set, any disputes made by neighbors are easily solved by referencing the rules. Additionally, the HOA board serves as a mediator whenever conflict arises, maintaining peace within the community. Cultivate visual beauty: Just as an HOA manages the maintenance of amenities, they also tend to take on all landscaping duties; like planting flowers and cleaning up trash. An HOA will ensure all properties are visually appealing and often have a section in the rules and regulations for property appearance, ensuring that the community is visually appealing to all who reside there. How to Start an HOA in 13 Steps Now that you have all the information of the importance of HOAs and what they can bring to your community, here are the 13 steps in starting one of your own! 1) Connect with your neighbors Reaching out to your neighbors will allow you to gauge whether or not an HOA is needed in your community. Ask those in your neighborhood if they would like some structure to help maintain your community, add value to your properties, set and eforce rules for other residents and enhance your neighborhood overall. 2) Read up on your local laws and procedures Depending on where you live your local government will have different laws and procedures when it comes to residential communities. Consider hiring a local HOA attorney to assist you in adhering to these ordinances when creating your own rules and regulations. 3) Research other HOAs Look to other established HOAs for inspiration and guidance for building out your own. Be sure to look at the following: Rules and regulations Amenities Monthly dues Meeting frequency Board members and roles By evaluating these things, you’ll be able to create a comparable HOA for your local community and make your neighborhood a competitive place to reside. 4) Build out your team Of course, we don’t expect you to do all of this on your own, you’ll need plenty of help to build out a successful HOA. To build a powerful team, surround yourself with motivated individuals who care about your community and make it the best it can be! Hopefully, these individuals will want to be a part of your HOA board as well, but that will be determined in your elections. 5) Determine your HOA’s wants, needs and goals With a strong team by your side, brainstorm what you hope to achieve with your HOA. Ask yourself the following questions: What does our community need? Are we hoping to increase property values? Are we looking to create visual cohesion in our neighborhood? Do we want to provide more services and amenities to our community? Are we trying to create a stronger sense of community? Don’t forget to use this time to create a basic structure for your HOA. You’ll need a name for your HOA, a basic operations structure and a list of key priorities your organization will seek to fulfill. This will make it easier to explain to others in your neighborhood when introducing the idea of an HOA. 6) Budget & determine fees One of the most common questions you will get when trying to start your HOA will be “What will the average fee be?” and “Who sets the annual budget?” This is why one of the most important steps of starting an HOA will be establishing your first budget and determining fees. To establish your budget, calculate all the expenses you expect the HOA to incur and add a small buffer for emergencies. There’s nothing worse than having to ask for more fees down the line when an unexpected cost arises, like fixing a leak in your community pool. Once you’ve built out a base annual budget, you can set your monthly fees for residents. 7) Get insurance! Insurance is vital for your HOA. This is how you will protect those on the board and the association from any risks associated with operating and threats from residents. Be sure to extensively research options in your area and consider connecting with other local HOAs to see what insurance they use. 8) Draft your governing documents While it may seem like a daunting task, the governing documents of your HOA are mandatory for enforcing your rules and regulations, as well as establishing yourself as a legitimate association. You will need a couple of different documents that will comprise all governing documents: Rules and regulations Articles of incorporation Bylaws CC&Rs (Covenants, conditions, and restrictions) Rules and regulations Consider consulting a lawyer or referencing other established HOAs when drafting your governing documents. 9) Incorporate as a nonprofit Your HOA’s articles of incorporation are the documents that officially establish your organization! Incorporating is how you can protect your officers and members from being personally liable in the event of a lawsuit against your organization. To do this you will need to follow a few simple steps: Register in your state (search your state’s name and incorporation to find the right website for your location!) File articles of incorporation Pay the associated fee for registration (this will vary based on your location) You can incorporate your HOA as a nonprofit or an LLC. This is where you have all your key information about your organization such as name, address, board of directors and purpose of operations. Although not common, your HOA can become tax-exempt. Check out the IRS website, where you can see if your community qualifies for 501(c)(4) status and file if you qualify. 10) Elect your board of directors Your board of directors is the core of your HOA’s operations. These are the individuals who the community will elect to serve. An ideal board member will be passionate about your community, understand business and have a reasonably flexible schedule. Being on the board is a volunteer position, as most HOAs don’t pay their board of directors. During your first official HOA meeting, your community should elect these members, so be sure to send out nomination papers ahead of time with the available positions. 11) Hire an HOA management company Running an HOA can be a lot of work, especially without the proper management. An HOA management company will take some of the work off the board’s hands and will deal with things like: Finding and working with vendors for community upkeep (pool cleaners, trash pickup, lawn maintenance, etc.) Managing the finances Managing violations/complaints Supplying software And more 12) Choose your membership management software The membership management software your HOA uses will be the digital home for your residents. This is the place where they will pay their fees, receive important community information, file complaints, request maintenance and anything else your community needs. On the management side, this allows you to keep everything organized in one place and efficiently manage fees, violations, annual budget and store important files. It’s important to have a great user experience on both sides when utilizing membership management. WildApricot (that’s us!) is a great tool for HOAs. Here’s a little bit of information on what features WildApricot has for your HOA. Member portal: this portal will be the digital home for your residents. Here they can see everything like newsletters, upcoming events, board of directors, pay their fees and report any violations they may see. Website builder: easily create a professional website where you can host any community updates, provide neighborhood resources, event calendars and welcome new residents. You can also build registration into these pages for upcoming events or meetings! Payments: Instantly process HOA fees coming from your resident’s or fines they may incur due to violating rules and regulations. Reporting: utilize the reporting features to see your HOA’s financial reports, analytics, and membership summaries. 13) Hold a kick off event! The most exciting part of starting an HOA is celebrating when it’s all done! A kick off event will be where you can bring the community together, provide any helpful information about the HOA, answer questions and build relationships. FAQs During your kick off event, you will likely get a lot of questions about the HOA and what changes residents will see. Here’s a list of frequently asked questions and some answers to give. What is a HOA fee for? An HOA fee is a (usually) monthly fee that pays for upkeeping the community. Depending on your community, this will also pay for amenities like a neighborhood pool, dog park, gym or clubhouse. Typical community upkeep will include trash pickup, lawn maintenance, pressure washing, community beautification and snow removal. Can you refuse to join a homeowners association? Most of the time, no. In general, once you purchase a residence in a community with an HOA, you are bound by the laws that govern the community. Essentially, by becoming a resident, you automatically become a member of the association and must adhere to the rules and regulations set by the HOA and pay the monthly fees. You also gain the benefits of an HOA community! What are common HOA rules? We have a whole article on common HOA rules and regulations, but here are the highlights: Landscaping requirements (mowing requirements, plant guidelines and restrictions on certain pesticides) Home appearance (paint color, yard signage, renovation limits, restrictions on size of fences/sheds) Trash and recycling rules (what is allowed in the trash vs recycling, breakdown of boxes, when trash cans can be out on the curb, discarding of furniture) Parking (how many vehicles each home gets, visitor parking, speed limits, street parking) Noise restrictions (quiet hours and restrictions on size gatherings) Common area maintenance (visitor rules, hours, code of conduct) What are unenforceable HOA rules? HOA rules and regulations become unenforceable when they: Conflict with law Violate homeowners’ rights Discriminate against individual homeowners Are in violation of the Fair Housing Act Because homeowners associations sadly have a known history of discrimination, we encourage you to have a diverse board of directors that can flag microaggressions or hidden biases. Launch Your HOA That’s all, folks! We hope you’ve enjoyed this step-by-step process on how to start an HOA. Be sure to check out a free 60-day trial of WildApricot to help manage your community and create a great user experience for everyone. 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