How to Start a Homeowners Association

Establishing a homeowners association in your neighborhood is a great way to bind a community together and ensure everyone shares the same goals and expectations about where they live. Not to mention, the number of homeowners associations (also 

known as HOAs) is rapidly growing in the United States. 

Before you can begin a homeowners association election, it is important you understand the many ins and outs of how an HOA works.

A Closer Look at HOAs 

An HOA is an organization that makes and enforces rules for residents within a subdivision or planned community. While they are typically formed by developers when a community is first constructed, they can also be created after the fact by existing members of a community.

If you want to create an HOA for an existing community, you may be faced with some questions you were not prepared for. These might include: Do HOA board members get paid? What are the local laws regarding HOAs? What is a proxy in a homeowners association? 

Establishing any new organization can feel like a monumental and overwhelming task. Consulting with an elections specialist or someone experienced in founding associations can help ensure your HOA addresses the specific needs of your community. 

We also recommend using ElectionBuddy, which has a menu of election-related services to guide you through this process and to make sure all your boxes are all ticked off. 

Understand the Local Laws Impacting HOAs

This point is especially important if you are creating an HOA community from the ground up. You may already have an understanding of the permits and guidelines necessary in the construction of a community but may need more insights on the legalities of an HOA. For example, Oregon HOAs can be established as either nonprofit or for-profit entities. In most states, HOAs are registered as nonprofits by default, which is why it is imperative you check the regulations of your state.

You will also want to see if there is an established Property Owners Association, as it may or may not impact your HOA plans. A Property Owners Association, or POA (different from Power of Attorney), may necessitate a separate petition process.

Establish the HOA

Each state has its own regulations regarding the establishment of a new HOA. Here are some general steps that can be followed, although each situation will be different:

• Start by establishing a business structure. Form a Limited Liability Company (LLC) or a nonprofit corporation.
• Create documents detailing covenants, conditions, and restrictions (CC&Rs). These essentially describe how your HOA will operate and outline what rules the homeowners will abide by.
• Develop a procedure for future modifications of the CC&Rs. Chances are, your HOA will need to amend them in the future as new issues or situations arise. Establish the steps that need to be taken before they can be modified. For example: Does this involve petitions? Elections? How does the HOA transform CC&Rs into a living document?
• Rewrite rules and regulations based on your CC&Rs in layman's terms. Make sure your average community resident can understand what the expectations are.
• Continue drafting governing documents, such as bylaws and articles of incorporation. These will detail important operating procedures, such as voting guidelines and meeting frequency.
• Elect officers and/or board members. Ensure they are all qualified for their positions. For example, someone who has experience keeping and managing ledgers might be an appropriate treasurer, whereas someone with leadership experience might be a good president.

Create Protections for Board Members

Being an officer or official of an HOA board comes with a high level of risk and responsibility. A legal consultant would be helpful in creating protections for board members in the event they are sued or accused of contract violations or discrimination.

Investing in directors' and officers' insurance can also provide financial protection to board members for events other than intentional misconduct.

Maintain Best Practices

There are many day-to-day operations of a community that an HOA and its board members are responsible for. This includes, but is not limited to:

• Maintaining sound financial records
• Maintaining open communication with residents, such as informing them of new rules and regulations, updating them on meeting times, etc.
• Enforcing rules and regulations, including penalizing members who are non-compliant
• Hosting social gatherings in addition to governing meetings

In Conclusion

While this article details many of the aspects of establishing a new HOA, it is still important to reach out for professional support to make sure nothing falls through the cracks. Services provided by ElectionBuddy can ensure your organization is following best practices when it comes to establishing a fair and qualified board.