HOAs vs POAs Differences, Advantages and Disadvantages
HOAs vs POAs: There are many ways to manage a community’s amenities, resources, property values and aesthetics. In recent years, a growing number of Florida-based communities have turned to homeowner’s associations (HOAs) or condominium associations (COAs) to manage their communities. There are also, in some cases, Property Owners Associations (POAs) that have an influence in how communities are managed and maintained. Although HOAs/COAs and POAs are terms that have sometimes been used interchangeably, this usage is incorrect as there are key differences between them in both form and function.
What is an HOA?
An HOA (in a community of individual homes) or a COA (in a community of condominiums) governs a community with regulations and policies that all of its member residences are required to follow. Membership in the HOA or COA is almost always mandatory within the community governed and the association itself will typically own and manage all common areas of the community. Common areas in a Florida association may include amenities like a community pool, gym, clubhouse, parking lots, roads and gardens. Standard services provided by these associations involve landscaping, trash collection and pest control. The rules in an HOA or COA are created and enforced with a view to maintaining the community’s uniformity, appearance and reputation.
HOAs and COAs provide services and governance paid for through imposing mandatory fees on all members of the community. The association is almost always run by a board of directors consisting of members of the community itself. Usually, officers in an HOA are nominated and elected to their roles by members of the communities they govern.
Pros and Cons of HOAs
The role of an HOA can be seen through a positive lens as a highly democratic form of self-governance for a community. Alternatively, they can be seen as highly restrictive organizations with amateur leadership that curtail personal freedoms and impose fees and fines for infractions that do not violate any local, state or federal laws.
Monthly fees assessed on members of the community can be significant (usually less than $500/month in most Florida communities but can be thousands of dollars per month in more exclusive areas). While these fees often can be seen as hefty, they cover the real costs of the amenities, services and maintenance managed by the association. Associations that fail to charge enough to cover routine costs and periodic maintenance end up with low reserves. This situation could mean that property owners in the community could be asked to pay for “surprise” fees called special assessments. Special assessment fees, which can be thousands of dollars per household, are far more likely when an association has low monthly or quarterly fees. Homeowners with unpaid fees are often fined, prohibited from selling their properties and may have liens placed on their properties for the value of the debt.
- Allows communities to be managed by their members, a more democratic model than that of a landlord who does not live within the community
- Protect property values through maintaining good aesthetics and property maintenance
- Provide services and amenities that might otherwise not be delivered at such a high standard by local government
- May be run by amateur volunteers with little real estate experience leading to inept or inefficient management
- Rules and regulations limit the personal freedoms of homeowners who may want to paint their homes, build extensions, hang flags or do other activities that violate association mandates
- Regular fees might either be too high, and thus unaffordable for some property owners; or too low, resulting in underfunded reserves and requiring hefty special assessments that may be unaffordable.
“Although HOAs… and POAs are terms that have sometimes been used interchangeably, this usage is incorrect…”
What is a POA?
A property owner’s association (POA) is a body made up of local residents and businesses that usually influences and seeks to influence policy and improve the development of a geographic area. The area under a POA’s purview may include a street, district, waterfront, an entire town or even a region. POAs stand in sharp contrast to an HOA or COA because of what they don’t do. POAs do not own the common areas of a community, do not govern the community with rules and regulations, do not impose fees or fines and are not directly responsible for the upkeep and maintenance of the community. Furthermore, POA membership is not mandatory as it is usually with an HOA.
POAs are typically funded through donations and membership dues and focus their efforts on issues like encouraging local commerce, improving roads, affecting certain policies locally and improving local education.
Advantages and Disadvantages of POAs
The role of a POA can be seen through a positive lens as an advocacy organization with the best interests of a community in mind. Alternatively, they can be seen as poorly effective in influencing short-term metrics such as current property values. Without enforcement power and with largely segmented membership, many POAs lack the ability to make a direct immediate impact in the way that an HOA can by imposing fines and setting rules.
Some POAs, in addition to being limited by geography, are industry-specific or have an angle that limits the scope of their member’s interests. This factor in the way POAs operate gives them an edge since it allows them to focus on single issues or related issues while HOAs have to manage a larger swatch of matters related to a community. However, the limited scope of some POAs can make them less relevant to some members of the community who do not share their concerns.
- Can be highly effective over the long term in steering the direction of a community
- Less likely to come across as controlling or unpopular because they do not impose fines, assess fees and enforce rules
- Are not heavily regulated and can be set up and managed in a number of different ways
- Likely to have little short term impact on the way a community looks or on its property values
- Do not provide essential amenities and services at the level of an HOA
- May be only relevant to or represent the interests of a subsection of the community it covers
South Florida Law
Here at South Florida Law we have boutique firm attention to detail with the big firm resources necessary to navigate the complexities of association law. If you are setting up, managing or in a dispute with an association in the State of Florida, call us today for an initial consultation on 305.900.8885 or reach out via our contact form.