How to Create a Legal Homeowners’ Association
Homeowners’ associations come with numerous benefits for both the homeowners and the property managers, the biggest of which include protection against neighborhood degradation, preservation of community values and integrity, and a reduced need for government oversight of housing conditions. For these reasons and several others, community residents and managers may institute a mandatory HOA. However, like with all good things in life, the creation of an HOA may be met with adversary, which can be effectively overcome with the right campaign and strategic planning.
If you are considering creating a mandatory homeowners’ association in your community, work with the Birmingham real estate attorneys at Cloud Willis & Ellis for guidance. Our team can help you plan and bring to life an HOA that will preserve the integrity of your neighborhood.
For formation purposes, homeowners’ associations are considered non-profits in the state of Alabama (HB241), and therefore must adhere to the same standards as a non-profit, which are outlined in Chapter 3, Title 10A, Alabama Business and Nonprofit Entities Code. As such, individuals must do the following prior to forming an HOA:
- Define terms;
- File certain documents with the Secretary of State;
- Allow the Secretary of State to maintain a public and searchable database of all association records;
- Elect a board of directors; and
- Adopt and enforce a set of rules.
Each step must be done with careful consideration and deliberation, and decisions must be made only after a receiving a majority approval.
If you hope to garner support for developing an HOA, you must define the purpose for establishing one in the first place. Your purpose may be very specific, or it may be multi-faceted. For instance, you may want to establish an HOA in order to enforce restrictive covenants and to main common areas, or maybe you want to enforce architectural standards of the homes within the community. Maybe you have noticed a significant decline in resident participation of neighborhood upkeep and want to establish a mandatory association that makes it so residents have to actively participate in the maintenance of common areas.
Whatever your reasons are for wanting a homeowners’ association, you need to be sure that the benefits of establishing one are clear and that they are benefits that the whole community can enjoy, otherwise you may have trouble garnering support. You cannot force members of an existing community to join an HOA (the rules are different for neighborhoods still in the design and development stages), so it is up to you to sell your purpose. Once you receive residents’ approval, put whatever agreement is reached into a written declaration, which is essentially a binding contract that all parties must adhere to.
Let a Birmingham Real Estate Attorney be Your Guide
Establishing an HOA is not as simple as putting together a list of rules and regulations you would like community members to adhere to and charging fees. If you want community members to take the HOA seriously and to respect the community in which they live, you need to develop a mandatory HOA. Though doing so many involve considerable legalities and effort, it will all be well worth it once the benefits of your efforts begin to get realized.
For help establishing a mandatory HOA in your neighborhood, reach out to the Birmingham real estate attorneys at Cloud Willis & Ellis for legal guidance today. Call our office or schedule an appointment online to get started.