How to Set Up an HOA Management Company


Homeowners Associations are progressively gaining popularity across the world as most of them are finding the security and convenience of being part of a privately controlled community more appealing than the troubles of maintenance.

HOAs manage matters affecting the community, such as local nuisances, safety and security, poor property maintenance, or provision of services not handled by the local authorities.

With this rise in popularity, many individuals and entities want to venture into the HOA business. While establishing an HOA management agency takes a lot of hard work and dedication, like any other business, the expected rewards are worth the required input.

This post explains the procedure of setting up an HOA Management Company. Read through to learn more.

How to start an HOA

Educate Yourself on the Procedures and Laws

The first step to take when contemplating starting an HOA is to get educated on the topics about homeowners associations thoroughly.

This will include becoming conversant with rules and regulations, state or local laws governing various aspects of the entity from administration to HOA dues, and legal steps that should be followed to legally and successfully form an HOA.

Also, there will be a need to hire a lawyer who will help with the legal part of forming and running the company.

Get the Locals’ Opinions

Before forming an HOA, it is imperative to do thorough research in the community for the level of interest from the locals and what homeowners want in their particular neighborhood.

In case there is no one interested in the association, then there is absolutely no reason for forming the company. Making subscription optional when starting out is important for collecting and maintaining interests.

Consider Insurance from the Start

Lack of insurance is a common mistake in most HOAs. In the initial stages of setting up an HOA, it is vital to get a cover for the company and protect it from various eventualities that may arise by investing in insurance.

Select a Strong and Quality Team

An HOA management company is as perfect as the people running it. The team that is selected to come together on this new and exciting venture will have a significant influence on the development and growth of the company.

Be sure to select a small but quality and strong team of people with skills, knowledge, and compatibility with each other.

Create Governing Documents

This stage can be the most time-consuming, but nonetheless, it is a vital step in forming a homeowners association. From the bylaws to the CC&Rs, there are several governing documents to be written for an HOA.

The Covenant, Conditions and Restrictions document is probably the most important since it outlines the rules governing the entity and the residents.

Another significant documentation is the accounting and financial records since it will describe the costs of operation, payment method and ensure transparency and integrity of HOA dues.

Establish the Company

After creating a solid business structure for the community, it is now time to set up the HOA and establish the business. Mostly, individuals opt for an LLC or non-profit corporation.

While doing this, there will be various requirements such as a name for the business, application for a federal tax number, registration fees, article of incorporation, bylaws, among others.

Final thoughts

Establishing a homeowners association can be an exciting and helpful venture for the entire community. The advantages of an HOA are indisputable as they supersede the cons.

While the process may be time-consuming and require significant input of hard work, the results are worth every sweat. Follow the steps discussed in this post to better form and run a successful homeowners association.