One of every five American residents live in communities governed by a Homeowners Association (HOA). The specific rules and regulations that are outlined in each individual HOA contract have been deemed a blessing by some homeowners, while others feel that the unwielding power and unreasonable expectations the HOA has over the community is indeed a curse.

To create a great Home Owner’s Association in a community, several steps must be undertaken to ensure that the Association adheres to all legal laws and ordinances that are set forth in state property codes.

Depending on the area, certain steps will probably need to be followed to formulate the HOA. These steps include:

  • Forming a nonprofit corporation or LLC to establish a business structure.
  • Creating conditions, restrictions, and rules homeowners must abide by, while describing how the HOA will operate.
  • Establishing procedures for future modifications of established rules and regulations.
  • Making the rules and regulations clear and easy to understand.
  • Drawing up bylaws and an articles of incorporation, as well as any other related documents.
  • Clearly outline operating procedures, voting guidelines, and meeting frequency.
  • Electing qualified board members and officers that truly care about the well-being of the community.

As HOA’s have to deal with a multitude of real estate issues, it is advisable that they hire an attorney specializing in HOA-related issues and concerns during the early stages of HOA development. Legal issues, whether they be on the local, state, or national level do arise. An attorney can keep the HOA apprised on any new developments, and may very well help the HOA avoid potential problems before they arise.

HOA’s collect dues from homeowners each month. This money goes toward administrative expenses (such as management services, and accounting and legal representation), as well as going toward the upkeep of common areas (which can include garbage collection, pool maintenance, and landscaping services). The balance of funds remaining after these expenses are paid into a reserve fund, which is kept to pay for larger projects. The HOA needs to keep comprehensive records of all these transactions on a monthly basis, and must bring in a board member that is capable of effectively administering this important HOA component.

Above and beyond anything else, a great HOA needs to elect board members and officers that truly care about their fellow residents and the community as a whole. People that are well informed, and openly communicate with homeowners on a regular basis. If the HOA has participating members that truly strive to do the best for their community, then conflict and strife can be greatly minimized, resulting in greater peace and harmony among close neighbors.