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Where to begin when setting up an HOA

On Behalf of | Nov 5, 2023 | Real Estate Law

If you wish to create a homeowners association (HOA), then you need to go about it in the correct way. Failing to do so could lead to future problems that ruin all your hard work.

A nice new property can seem attractive to you and potential homeowners. Yet, you need to think past initial investment strategies. What will happen when the paintwork starts to fade, when things need replacing or when people age and have families? Taking a long-term view will allow you to more effectively construct a realistic plan that will help you to ensure that your efforts provide value to you and homeowners for years to come.

What rules must you abide by?

Before you start creating rules that you’ll require homeowners to abide by, you need to understand the various rules you must abide by as the committee of the HOA. Even one small breach could be costly and problematic.

Where does your responsibility begin and end?

While you will have overall control of the community, you cannot control everything – residents have rights, too. By the same token, they need to know what they’ll need to resolve on their own.

How will you provide transparency?

Residents will pay money into the scheme, and as the group in control of those funds, you have a fiduciary duty to do things correctly and honestly. You need to keep your accounting accurate and transparent. Doing so will reduce the chance of problems with residents or the IRS.

The legal documents you create will be crucial to your future success as an HOA. Getting help to create them and to better ensure that you meet all your obligations will reduce the chances that you’ll face legal trouble down the road. Being thoughtful and proactive now are efforts worth making.