In 2020, there were approximately 354,000 community associations in the USA, according to the Foundation for Community Association Research.
Homeowner’s associations account for more than half of these organizations, but there are other ways to manage housing clusters and condominium buildings.
Are you puzzled about these types of property associations? Keep reading for a brief comparison of HOA vs POA management options.
What Is an HOA?
A homeowners association usually comprises a group of residences and common areas shared by a community. They’re most common in housing developments and gated communities.
HOAs often set up a strict set of regulations that all residents must abide by. The aim of these is to ensure a good quality of life and equal treatment for all residents.
These rules may include an HOA guide to preferred architecture or limitations regarding pet ownership.
By setting up and enforcing these guidelines, HOAs try to ensure a comfortable, well-run community with stable property values. In many cases, homeowners might feel restricted by the regulations, but it’s important to keep in mind they’re for the benefit of everyone.
Homeowners must occupy the property they own to become active members of the relevant HOA. In many cases, membership is mandatory for everyone living in the community.
In some cases, HOAs employ the services of an outside company to help them with areas outside their expertise.
What Is a POA?
A property owners association works in much the same way as an HOA does. The biggest difference lies in its main goals and functions.
HOAs focus entirely on residential issues, whereas POAs can govern multiple residential and business properties, as well as empty lots.
A POA works to improve and maintain a neighborhood, area, or town. In many cases, the POA centers around a landmark feature like a lake, golf course, or park.
They can put zoning restrictions in place, work to upgrade community areas, and undertake development projects. In this way, they can enhance property values across a larger area.
In most cases, a POA comprises homeowners, property managers, and business owners resident in a particular area. You don’t need to own property in the neighborhood to join a POA.
Although a POA does set up some rules, there are aimed at supporting the real estate industry rather than regulating homeowners.
In some cases, a POA might provide legislative, networking, or educational services for property owners.
HOA vs POA Functions
A POA has a longer-term focus than an HOA does, although some POAs operate along the same lines as an HOA. Each of these associations works to regulate an area of land, but the property types and services involved differ.
One home can be a part of both an HOA and a POA.
If you’re buying a home, ask about this aspect, as you’ll need to pay fees to both organizations for their services.
These fees go toward the work performed by the HOA or POA.
In the case of an HOA, these services may include the upkeep of common amenities, like:
- Swimming pools
- Sports facilities
- Golf courses
- Parking facilities
They usually include security services and may include opportunities to network with other homeowners.
Most of the HOA rules relate to these services and could pertain to outdoor color schemes, parking rules, yard maintenance, and operating times for communal facilities.
In return for their fees, homeowners get to enjoy the fruits of the HOA’s labor.
POAs aren’t concerned with the daily running of facilities in their area or nitpicking rules about home appearances. Rather, the focus is on long-term projects that serve to uplift communities and boost property values.
In many cases, POAs have a strong focus on promoting industry and growth in their localities, too.
HOA and POA Fees
All homeowners or renters in a housing community pay HOA fees, whether they sign up as a member of the HOA or not. That’s because everyone enjoys the benefits of the HOA’s work.
Homeowners pay a monthly fee to cover the expenses incurred by the HOA. There is no set amount for HOA fees and these vary according to location, the size of the community, and the number of amenities in their care.
To calculate these fees accurately, the HOA board compiles a list of projected expenses for the year and sets up a monthly budget based on that. The fees include a portion of money for future repairs, upgrades, and replacements.
They divide their findings by the number of homeowners to come up with a monthly amount.
These fees can vary from $100 per month to as much as $700 per month. In a high-end community, homeowners might even pay fees amounting to thousands of dollars.
In some cases, HOAs charge community residents annually instead of monthly. It’s important to know the billing frequency of an HOA before you buy a home that falls under its auspices.
This can help you avoid unpleasant and unexpected budgeting issues. Remember, when you buy a home within an HOA, you’ll need to pay prorated HOA fees for the year, too.
POA members also pay fees, although they usually pay these annually rather than monthly.
Make the Best Decisions
POAs and HOAs offer many benefits for property owners. They ensure you get to live in a well-run community or city without having to worry about maintenance and upkeep yourself.
Knowing the intricacies of an HOA vs POA helps you make more informed property purchase decisions. Browse our blog for more interesting information to help you make good choices.