New association being formed

Hello, I am in a neighborhood that had covenants by the developer, which has gone bankrupt. A new developer purchased the land, now some of the neighbors want to form a homeowners association, which is good to keep the area nice, BUT...we have no common ground & are on city streets. In the by-laws that were presented, it states insurance will be purchased for the common ground and for the board members to protect them. Is this common??? Also a few of them have asked to be paid for lawyer fees for drawing up the by-laws, which was never discussed. We had a small meeting, less than half of the homeowners were present, we agreed to only investigate what it would take to set one up, not incur any fees. Any info would be great.

There's more to it than By-laws. Those are only internal documents. Your HOA needs to have Convenants & Restrictions (CC&R's) on file at the court house. I would go down there to the records department to see if any already exist. Your HOA would need insurance to protect the board members PERSONAL assets and common area. Common area can be a sign at the entrance of your development. It's basically all in one package when you get HOA insurance through an Insurer. However, the HOA should be INCORPORATED for the insurnace to be of any benefit. Which means filing Articles of Incorporation documents with the STATE. You will see many other topics on here covering this subject.

A HOA is ONLY funded by it's members FOR it's members. Which means if your forming HOA wants to hire a lawyer then ALL the members must chip in to pay the bill. That has to be paid EQUALLY. If you got 100 homes in your HOA then you divide the costs 100 ways. This will be the same with dues when you all decide what you want to cover with this HOA.

Your HOA may be better off seeing if it can set up an Archectual Control Committee (ACC) instead of or to be included in your HOA. They are a committee that enforces the actual "Pretty" rules. Those involving the actual look and uniformity of your neighborhood. I've heard of some neighborhoods just having an ACC. Which does still have board members on it but it's not incorporated and all formal like a HOA.

A few tips. You can find some of this documents you need like the Articles of Incorporation at an Office supply store. It's in the "Do it yourself documents". They may or may not be on the shelf. I would look them up at the site to see if you can order them online. They cost about 20 dollars.

Lastly... A HOA does NOT keep your home values maintained. A HOA only keeps you and your neigbors properties ATTRACTIVE to potential buyers. House values are based on factors such as location and houses of similar size/features that sold in a general few mile area of each other. A home in your HOA may sell because a potential buyer likes the look of your neighborhood and the rules that are enforced to keep it that way. So don't form a HOA thinking it has anything to do with home values. It's just a sales tool to ATTRACT buyers.

Jack

Good catch on Larry's part about do the Covanants call for a mandatory HOA.

If not mandatory and with few expenses, one might consider forming a benevolent, voluntary group thus maybe avoiding all the pitfalls/costs of a mandatory group such as having a BOD, elections, D&O insurance, Chief Complaining Officers, etc.

The more I think about a benevolent association...the more I like it...LOL

Hoipe this helps.