When considering investing in a new town home project, one of the important aspects of such a project is the formation of the homeowners association, or HOA. The HOA is a group of property owners within a project that maintain an agreed upon quality of life in the neighborhood.

From where ownershoa and town homes can park to who can rent to how to deal with repairs are just a few of the many responsibilities of an HOA. Yet the main goal is to support and increase individual property values within the project. How are HOAs formed and what can you expect?

An HOA is a group of volunteers that owns or intends to own a property within a town home project. There are no requirements as to how many are needed to form the HOA. It is this group of individuals that will craft the covenants, conditions and restrictions, or CC&Rs, that apply to the units. HOAs must follow local and state guidelines the community must adhere to when establishing an HOA and there will be some necessary legal fees involved to make sure the HOA complies with existing statutes.

The CC&Rs can be quite numerous and involve everything from when HOA meetings take place, establish HOA dues that property owners must pay as well as rules that property owners are required to follow. To start, obtain a set of template CC&Rs, your legal advisor can help with that, and then begin the process of including or deleting information.  For instance, if you don’t want cars parked in the driveway of the town home make it a restriction and include it. Don’t make too many restrictions as that can drive many potential buyers away. Remember the job of an HOA is to support, not detract from property values.

The HOA must operate as a legal entity and counsel will guide you but many HOAs are legally organized as non-profit entities. Then finally, from within your group elect acting officers and then schedule your first general election of new officers when property owners can vote for the new association. Forming an HOA isn’t really all that expensive but the most important thing to do is make sure you’re following local and state guidelines to the letter to make the process go as smoothly and efficiently as possible.