What is POA in real estate? How’s it different from HOA?

If you live in a community – whether it’s a suburban neighborhood, a vacation rental property, or a retirement home – you’ll likely come across terms such as Homeowners Association (HOA) and Property Owners Association (POA). Both play important roles in maintaining the quality of life and property values. In this article, we’ll explain what is POA in real estate, how it differs from an HOA, and its advantages and disadvantages.

What is POA in real estate?

A POA is a group of local residents and businesses. It works to improve and influence the development of their area, whether it’s a street, district, town, or region. Unlike an HOA or Condominium Owners Association (COA), POAs don’t own community areas, enforce rules, impose high fees, or handle essential maintenance. In fact, membership in a POA is voluntary. It usually gets funding from donations and membership dues. And, focuses on things such as boosting local businesses, fixing roads, influencing local policies, and enhancing education.

What are the responsibilities of a POA?

A POA is responsible for various tasks to keep the community running smoothly. They maintain common areas such as parks, playgrounds, swimming pools, roads, and gates, ensuring everything looks good and functions well. 

They also enforce community rules to uphold standards and protect property values. By managing the budget and sometimes collecting modest fees from property owners, they fund essential services and projects. POAs also help resolve disputes between residents to keep the peace. Additionally, some POAs organize events, social gatherings, and activities to enhance community life. 

Keep in mind that the specific roles of a POA can vary from one community to another. Moreover, property owners typically have a say in how the POA, They elect a board of directors to make important decisions.

HOA vs. POA: What’s the difference?

A POA typically has a broader focus, managing common areas and amenities with less control over individual properties compared to an HOA. Furthermore, HOA membership is usually mandatory for all home owners in the designated area, requiring everyone to pay assessments. In contrast, POA membership can sometimes be optional. It depends on the community’s rules and specific property situations. 

While POAs have some rules and regulations to maintain common areas and shared amenities, they generally impose fewer restrictions on individual properties. HOAs, on the other hand, often have detailed and specific rules governing property appearance, maintenance, and repairs including aspects such as paint colors, lawn care, fence height, and architectural details.

POA fees are typically used to maintain common areas and shared amenities, whereas HOA fees can be higher due to their broader range of control and services. In terms of influence, property owners usually have more say in a POA, as they elect board members who make key decisions. HOAs govern in a more rigid manner with less resident influence in some cases. Lastly, POAs are found in a variety of residential communities, from rural neighborhoods to suburban developments, while HOAs are more commonly associated with suburban neighborhoods and planned communities.

What are the pros and cons of POA?

Pros

• POAs are effective at guiding the long-term vision and development of a community, helping to shape policies and improvements that benefit residents over time.
• Since POAs do not have the authority to impose fines, monthly fees, or enforce rules, they are generally seen as less controlling and more resident-friendly compared to HOAs.
• The structure and property management of POAs are not heavily regulated. They are tailored to meet the unique needs and preferences of their members, making them adaptable and responsive.

Cons

• POAs often struggle to make noticeable short-term changes in property values or the physical appearance of the community. They are not as effective as an HOA.
• Unlike HOAs, POAs do not provide or manage essential amenities and services, such as maintaining common areas. This can be a drawback for residents seeking these benefits. Remember that a well-managed HOA helps ensure you can sell your home at a good price when the time comes. A POA might not be of help there. 
• Some POAs may only address specific issues or represent the interests of a particular subset of the community, potentially leaving out the needs and concerns of other residents who do not share the same priorities.

What’s the difference between POA and COA in the real estate industry?

A POA is a broad governing body that includes HOAs and COAs. It offers support, legislative help, and networking opportunities for property owners. It includes homeowners, business owners, and property managers. POA fees are usually paid annually and combined with HOA or COA fees, covering community-wide management and maintenance. On the other hand, a COA is specifically for condo owners, who automatically become members upon purchasing a unit. COA fees cover common areas, building repairs, and maintenance. Condominium owners own their individual units and share ownership of the building and grounds with other residents. Unlike a POA, COAs also often include utility costs in their fees.

Last thoughts

A POA governs various types of properties. These could include single-family homes and businesses. This is unlike an HOA which focuses on a community of similar properties. POAs aim to educate the community about real estate and support long-term development projects, zoning regulations, and local improvements rather than setting rules about property appearance. They represent more than just homeowners and can oversee entire towns or specific areas such as historic districts. The bottom line is that their primary purpose and focus extend beyond property values and aesthetics. They include the overall development of business and community.

Written by Ramona Sinha. December 29, 2024

Ramona is the Senior Content Writer for Kukun. This experienced blogger uses simple and succinct words to decipher the complex phenomenon called life. She has written articles covering a broad range of topics, such as real estate, lending and mortgage, finance, business, taxation, home designs, home improvement projects, decor concepts, and more. An avid traveler, she’s a digital nomad at heart and an animal lover from the depth of her soul.