Whether you live in an established neighborhood or a developing area, chances are your homeowners’ association leaves something to be desired. Run-down common areas, unkempt yards, locked pool gates, and wildly inconsistent property values are all symptoms of a neighborhood without community standards.
If you’ve ever feared walking through your neighborhood and seeing maintenance-free landscaping taking over, it’s time to form an association. Bringing order and basic governance to your neighborhood will turn a loose collection of homeowners into a polished community looking out for one another.
Homeowners unite! It’s time to start an HOA.
What Is a Homeowners Association?
Before learning how to start an HOA, you should first understand what a homeowners’ association is. Simply put, it is any legal entity formed to govern and maintain a planned community.
Breaking that definition down, starting an HOA really comes down to two key components –
Owners of property entering into an agreement
This agreement forces neighbors to adhere to certain aesthetic standards and to pay dues that cover the cost of maintaining the neighborhood.
Purpose of the Association
The main goal of any association is to keep neighborhoods neat, safe, and predictable. Common methods of maintaining property value include regulating common areas, architectural guidelines, and ensuring all neighbors can benefit from shared amenities.
Typical duties of an association include:
- Retaining landscapers to manage common areas
- Negotiating trash collection services
- Street light maintenance
- Upkeep of budget and financial records
Voluntary vs. Mandatory Neighborhood Associations
It is important to note that there are two types of associations – voluntary and mandatory.
With a voluntary neighborhood association, residents can decide if they want to join and pay dues. Homeowners’ associations that fall under this category will typically focus on social gatherings and light advocacy, but will not have the legal power to enforce rules.
A mandatory homeowners’ association requires that you buy into it when you purchase your property. These covenants are attached to the property deed. This gives the association the right to collect annual assessments and legally enforce agreed-upon stipulations.
Why Communities Create Homeowners Associations
You may be wondering, why would I want to start an HOA? Well, there are several reasons a group of neighbors would want to come together and form an official governing body. The primary driver is long-term property value stability.
No one wants to live on a street where one house is painted like a rainbow while another is falling down. An association creates a standard that all homeowners must meet or risk defaulting on their HOA dues. Having everyone maintain their property keeps the neighborhood desirable for future buyers.
Beyond just home values, associations help enforce community standards. As mentioned above, these standards can include anything from approved exterior paint colors to acceptable landscaping materials. Petitioning your neighbors to agree upon clear, written rules helps eliminate gray areas that can cause friction between neighbors.
Finally, HOAs are great for managing common areas and organizing neighborhood improvements. Whether that is keeping up with street lights and monument maintenance or deciding as a group to upgrade the landscaping, having an official association gives your neighborhood legal standing and access to funds to better your community.
Can You Start an HOA In An Existing Neighborhood?
One question we commonly hear is whether you can create an association after homes have already been built. You certainly can, but the process for starting an HOA is very different for established neighborhoods than it is for new builder communities.
In a new development, the builder owns all of the land and will typically create a mandatory association before selling the first home. However, when adding an HOA to an existing neighborhood, you must take the long road of legally amending each homeowner’s deed.
To make an association mandatory, you will need to get every single property owner to agree to sign over a piece of their property deed. Every homeowner who bought their house originally signed on deed paperwork that did not include HOA fees. To overcome this barrier, you can choose to form a voluntary association vs a full HOA. With a voluntary association, only homeowners who sign up will be required to pay fees and follow the set guidelines.
Another huge hurdle is your local laws and statutes. Not only will you need to review your state HOA laws, but your city might have rules around certain covenant additions. For instance, the Texas Property Code has specific rules outlining how you add covenants to existing deeds.
Step 1 | Determine Community Interest and Support
The first step to starting an HOA starts before you even contact a lawyer. To successfully start an HOA, you must have buy-in from your neighbors. You cannot just unilaterally decide that your community needs ground rules.
- Survey homeowners. Create a survey that gets to the heart of how your neighbors feel about the current condition of the neighborhood. Are they interested in forming an association? Use every resource at your disposal to get people to participate. Online forms are helpful, but door-to-door might be necessary to reach more residents.
- Identify pain points. Once you’ve gotten a good sample of opinions back from your residents, start to identify common themes. Are people scared of children speeding through the streets on dirt bikes? Are they upset about the sorry state of the entry sign? Make a list of potential issues your HOA can solve.
- Decide on your goals. Based on the feedback you receive, you should start to draft some objectives. Maybe you want to form an HOA specifically to fundraise and repair the neighborhood entrance monument and establish a basic landscaping contract.
- Meet with neighbors. Hold a backyard BBQ or town hall meeting to present your findings. Get your neighbors excited about the possibilities of forming an association. Assuage fears over strict regulations by painting a picture of how pooled money can fix shared problems.
Step 2 | Consult Legal & Community Management Professionals
Now that you know your neighbors are willing to participate in the process, it’s time to start thinking about the legal framework your HOA will operate under. While there are plenty of online documents and forms, your association needs to be customized to your community.
Working with HOA attorneys is a must. Your attorney will walk you through all of the specifics of Texas HOA laws and make sure your documents are filed correctly with your city. They will also draft the precise language your HOA needs to force your neighbors to pay you money.
It is also incredibly helpful to consult with an HOA Management Company during this phase. Your attorneys can handle all of the legal jargon, but operators can provide valuable advice on everything from fair vendor pricing to internal administrative workflows. By soliciting both experts at the beginning, you can mitigate your risk of personal liability later and ensure you’re hitting all of the state-specific checkboxes from day one.
Step 3 | Create Your HOA’s Governing Documents
Okay, HOA bosses, it’s time to get technical. The place where all of the rubber meets the road is your association’s governing documents. Simply put, these documents are how your HOA is run. They dictate how much board members get paid, how often you must hold meetings, and what your residents can and cannot do.
Articles of Incorporation
The first document you will file is your HOA’s Articles of Incorporation. This is the founding document of your nonprofit corporation and is filed with the Texas Secretary of State. To complete your Articles, you will need to provide a name for your association, your registered agent, and the purpose of your corporation.
Bylaws
Bylaws are the internal operating agreements of your HOA. This document details how your board of directors is elected, what constitutes a quorum for meetings, and how meetings are conducted.
CC&Rs
CC&Rs stand for Covenant, Conditions, and Restrictions. These rules are placed on every home that falls within your jurisdiction. They limit how property owners can use their land, architectural guidelines for exterior aesthetics, how and when the association can collect assessments, and how rule-breaking is handled.
Rules and Regulations
Lastly, your board will develop Rules and Regulations. Think of Rules and Regulations as ever-changing community guidelines. This is where your HOA will dictate things like pool hours, holiday decoration deadlines, and parking policies.
Tip: Organizing Your HOA Documents
Remember – governing documents always take precedence over what your board decides. If there is ever a conflict between your association’s rules, remember that the Articles override the Bylaws, and CC&Rs override the rules.
Step 4 | Form Your HOA Board of Directors
Alright! With your HOA’s legal structure hammered out, it’s time to start discussing who is going to run your association. Every HOA must have officers who lead meetings and make executive decisions on behalf of the entire community. Your starting board will either be appointed by your existing steering committee or elected by your members at your first official meeting.
Typical HOA board positions include:
- President
- Vice President
- Treasurer
- Secretary
Your board of directors acts as a volunteer governing body for your entire community. As such, there are certain fiduciary duties every member must uphold. Essentially, this means that each board member is financially responsible for putting the good of the community above their own personal feelings. Learn more about HOA board responsibilities.
Over time, your HOA will transition from a board appointed by neighbors to one that is democratically elected. Your bylaws will specify how often elections occur.
Tip: Grow your HOA Leaders
Preventing board burnout is one of the most important functions of your HOA. Create sub-committees to handle large tasks. Think architectural review committees, event planning committees, and more. This allows other volunteers to step up and lead smaller teams.
Step 5 | Establish an HOA Budget and Dues
As established in step 3, your association needs money to operate. Everything from vendor contracts to monthly meetings requires dollars to pay our professionals. Your first order of business should be to create a detailed budget that your homeowners can buy into.
- Determine annual expenses. What does your HOA need to pay for each year? Make sure to account for recurring costs like landscaping, street light payments, insurance premiums, attorney fees, and accounting costs.
- Planning for the future. In addition to your operating budget, your HOA should dedicate a portion of its income to future projects. A reserve study, or commonly known as a “rainy day fund”, is reserved for major infrastructure repairs. Think of things that need to be done every 5-10 years, like repaving roads or rebuilding the clubhouse.
Now that you know how much money you need to collect each year, divide that amount by the total number of homes in your HOA. The result is how much you should assess to each homeowner.
Once you have your budget completed, make sure to open up a secured bank account and establish clear, written policies for due dates, late fees, and collection practices. Transparency is key!
Step 6 | Your HOA Goes Into Operations
Congratulations on starting your HOA! With capital collected and a board in place, it’s time to start thinking about long-term maintenance and daily operations.
- Evaluate your maintenance needs. How often will you need to inspect common areas for damage? Do you need to adjust irrigation schedules based on the season? What services will you need to outsource to reliable vendors?
- Analyze vendors. Let’s say you decide to contract with a landscaping company to maintain your community’s common areas. It’s important to get quotes from multiple vendors and ensure your contract includes a service level agreement (SLA). You want your association money to be spent wisely and ensure the work is completed in a timely manner.
- Communicate, communicate, communicate. There is no such thing as over-communication when it comes to running an HOA. Send monthly newsletters, hold annual meetings, and welcome questions from your homeowners. Your best tool as an HOA board member is information.
- Keep Good Records. Every decision your HOA makes should be documented and put into a file. This is incredibly important if you want to maintain strong protections from personal liability. You should maintain detailed files on meeting minutes, financial statements, architectural approvals, and vendor contracts.
- Enforce Covenants Impartially. As previously stated, HOA board members have financial responsibilities to the entire community. It can be difficult to fine your own neighbor for violating community standards. However, the professionals at your management company can remove all personal emotion and ensure courtesy notices and violation letters are sent objectively and consistently.
Benefits of Hiring a Professional HOA Management Company
Running a community association is a part-time job. It requires hundreds of hours worth of legal research, accountant-level budgeting, and administrative diligence. Most board members are volunteers. They’re just neighbors who care about their community, trying to do their best with spare time on the weekend.
That’s where hiring a professional HOA Management Company can help.
Administrative Support
HOA management takes care of the mundane stuff. They ensure homeowners receive timely notice of board meetings, official documents are prepared correctly, and all homeowners are contacted about violations or violations.
Legal Compliance
Professional management companies operate HOAs day in and day out. Not only can they keep your HOA up-to-date with the ever-changing Texas Property Code, but they have systems in place to mitigate your risk of personal liability.
Financial Oversight
Your HOA is a tiny corporation with legal responsibilities to your members. With professionals managing daily accounting, tracking delinquent assessments, preparing monthly financial reports, and filing annual taxes, your HOA has little chance of suffering from financial misuse.
Vendor Management
Professional management companies work with trusted vendors all the time. Not only can they provide your HOA with competitive bids from screened, insured contractors, but they’ll make sure the work is performed correctly.
Building a Thriving HOA For Years to Come
First and foremost, your HOA is only as strong as the community behind it. If you don’t have buy-in from your neighbors, there is no amount of rules that will create order. Keep detailed records, hold open board meetings, and communicate your actions.
Next, invite as many residents to participate in the association as possible. Create committees for neighbors who want to get involved. Plan social events to encourage neighbor interaction. The more your neighbors know each other, the more they will care about your community. Balance strong governance with personal connection, and you’ll foster an environment that people don’t want to leave.
Finally, consistency is key when setting your association’s budget. Budget responsibly, and homeowners will have trust in their HOA. Over time, consistent financial contributions and capital investments into your neighborhood will protect property values for years to come.
Contact SBB Management Company | We’ve Got You Covered
Starting a new HOA from scratch or guiding an existing neighborhood toward organized governance takes special care and attention. At SBB Community Management, we focus on cultivating strong relationships with the communities we serve across DFW and Houston. We understand that there are real people reading each email and making financial decisions on behalf of their neighbors.
See what our HOA management services can do for you and your association. Our teams will work closely with your board members, providing customized financial plans, impartial rule enforcement, and proactive property maintenance. Let SBB Community Management take the stress out of managing your neighborhood so you can enjoy it to the fullest. Reach out today to see how we’ve been supporting Texas neighborhoods for over 50 years.
FAQ
Q. What do you need to create a homeowners’ association?
You need your neighbors to agree to be in an HOA, file the proper documents with the State of Texas, write Bylaws that govern how your HOA operates, elect a group of residents to serve on your HOA board, and collect monthly or annual HOA fees to pay for your HOA’s budgeted expenses.
Q. Can you form an HOA after a neighborhood is built?
Yes. Any group of homeowners can come together and form an HOA. The challenging part is making the HOA mandatory for all homeowners to join. If you want to force all owners within a specific area to join your HOA, you will need 100% participation when amending property deeds.
Q. What paperwork do you need to form an HOA?
You will need a few legal documents to form an HOA. Specifically, you should have articles of incorporation, Bylaws, and CC&Rs.
Q. How much does it cost to start an HOA?
Every HOA startup cost will vary, but should include Texas filing fees, attorney fees to customize your documents, general liability insurance, and initial accounting costs. These fees are typically split up between the founding members of your neighborhood.
