HOA formation generally follows a sequence: an attorney drafts and files the formation documents (articles of incorporation, bylaws, CC&Rs), the builder sets an initial operating budget for the association, and the community is registered with any required state agency before the first unit closes.
Each step depends on the one before it — a budget can't be finalized until the community's scope and amenities are settled, and CC&Rs can't be recorded until the legal entity itself exists.
The initial operating budget, often filed alongside a DRE budget where required, sets the assessment level new homeowners will pay from their very first month of ownership. Getting this number realistic during formation avoids the disruptive assessment increases that happen when an underfunded budget catches up with reality after homeowners take over.
Formation is generally complete once the legal entity exists, governing documents are recorded, and the association is operationally ready to collect assessments and manage common areas — typically right before or at the first homeowner closing. Formation being complete doesn't mean the builder's involvement ends there, though; the community still moves through the full declarant control period before turnover to a homeowner-elected board.
