The residential real estate market is one of the most profitable and highly competitive markets in the U.S. At present it has a value of $106.70 trillion and can reach $155.60 trillion by 2029. In this market, the property is generally regulated by either Property Owner Associations (POAs) or HOAs.
These two legal entities regulate the residential property guidelines and maintain the common areas in the property. However, there are vast differences among these two. This blog covers the differences between the Property Owner Association and HOA and elaborates on the meaning of both terms.
What is the Property Owners Association?
A Property Owners Association (POA) is a legal entity or group of individuals who take responsibility for administering and maintaining the residential area, such as neighborhoods, subdivisions, or condominiums. The fundamental role of the POA is to protect property values and quality of living standards through the enforcement of community guidelines.
The functions of POA include maintaining property common interface spaces like parks, swimming pools, gyms, laundry rooms, parking, and playgrounds. They also carry out other functions like collecting rent, organizing meetings and events, solving queries, preparing the budget, and regulating community rules and regulations.
What is HOA?
A Homeowners Association (HOA) is a legal entity that oversees and governs a residential property community comprising a single one, townhouse, or condominium. The main responsibility of an HOA is to preserve and increase property values, as well as provide residents with a better quality of life through the implementation of rules and regulations.
An HOA is often administered through a managing board comprised of directors appointed by the residents of the neighborhood. They are responsible for continually meeting to review and address any matters concerning the community, preparing the community budget, and regulating rules in the community.
Property Owner Associations and HOAs look similar to each other but, in reality, they are different in functioning, scope, flexibility, and management. Here is Property Owner Association vs. HOA: a comparison that reflects all the differences you should know in 2024.
Property Owners Association vs. HOA: What You Need to Know in 2024?
Knowing the differences between POAs and HOAs in 2024 is vital for buyers who are considering purchasing property. Though both POAs and HOAs work to preserve and further community norms, they are not entirely identical in terms of the sphere of their activities and the purpose they pursue. Here is a difference between them:
1. Scope:
HOA:
This type of association works mostly on residential real estate, including single-family homes, townhouses, and condos. The primary focus is on sustaining and regulating the community and common areas.
POA:
It is less specific and can involve the sale of all kinds of properties, including residential and commercial properties. POAs oversee the whole subdivision or complex of residential and commercial properties.
2. Membership
HOA:
Those who buy property in the community become members of HOAs.
POA:
The organization comprises all property owners and residents in the area covered, and it may include owners of business premises among the residents.
3. Governance
HOA:
This is administered by a seven-member board of directors chosen from the community's residents. The board dictates and regulates covenants, conditions, and restrictions (CC&R) and takes responsibility for maintaining and managing the common grounds and facilities.
POA:
Unlike HOAs, this is also governed by a board of directors, but the board may be more extensive owing to the presence of business premises. The board is responsible for the regulation and upkeep of common areas in both residential and business units.
4. Dues and Assessments
HOA:
The HOA assesses fees from the homeowners to cover expenses related to maintaining common property such as parks, swimming pools, clubhouses, and community services.
POA:
Depending on the nature and type of property, it collects fees from all property owners to utilize them in maintaining business halls, conference rooms, parks, and other common areas.
5. Regulation and Enforcement
HOA:
Regulate laws regarding property appearance, noise levels, changes to the exterior of homes, and guidelines for common areas.
POA:
It is responsible for implementing a wider range of rules, which may encompass commercial premise regulations and other rules for residential ones.
6. Community Impact
HOA:
It focuses on effectively organizing and managing the residential property for homeowners’ well-being.
POA:
It focuses on maintaining the uniformity of both individual living spaces and commercial premises.
Navigating POAs and HOAs: Expert Guidance from Property Management Firms
Understanding the difference in the concept, meaning, scope, and functioning of the Property Owners Association and HOA is important for the buyers to make a wise choice. An HOA regulates and maintains a residential property, whereas a POA regulates both residential and commercial property. Besides, the rules of a POA are more rigid as compared to the HOA.
Choosing between POA and HOA is a tough decision. But you can take the help of the differences mentioned above. Moreover, to find the best POA or HOA-regulated property, you can also contact Citadel Property Management Corp. The firm will enable you to find the right residential or commercial property and help you navigate through the rules and restrictions of the POA and HOA.
