Property owners associations (POAs) are similar in many ways to homeowners associations (HOAs), but the two should not be confused. Property owners associations, as the name suggests, are related to all properties that are part of the association, not just homes.
This may include businesses, homes, and agricultural lands. POAs often exist where local government is underfunded or in rural areas where there may not be enough local government to properly oversee an area. POAs are found in larger cities, as well, often focusing on a specific area.
POAs are far larger than HOAs, which often only cover a single subdivision or a single condo. This means increased complexity, though the style of association voting remains similar. It is this added complexity that leads many POAs to incorporate.
Property owners associations are not required to incorporate. In smaller jurisdictions where the membership may only be several people, there is little reason to incorporate a POA, especially if there are no pressing legal matters the POA must handle.
However, a large part of a POA's job is to advocate on behalf of property owners, including businesses. In many ways, a property owners association is a civic organization that advocates for changes and improvements.
For example, if there are several businesses along a poorly maintained waterfront, a local POA may recognize that this is driving down property values and reducing economic activity in the area. In situations like this, the POA may file a lawsuit against whichever governing body controls the river, advocating for these businesses to get the river cleaned.
If the POA is not incorporated, it may have difficulty achieving legal recognition as an entity with the power to sue the state. Because of this, an unincorporated POA may be forced to file individual suits on behalf of every property owner or hope it meets the standards for a class action lawsuit. Both of these outcomes are far more complex and costly than if the POA is incorporated.
Incorporation is a fantastic shield in the world of law. By incorporating, a POA becomes a recognized legal entity separate from its members, while still being controlled by its members.
Incorporation also allows a POA to create corporate bylaws and regulations regarding its membership and elections. This gives the POA greater legitimacy and allows members who violate the rules to be removed. An unincorporated POA has no legal standing to eject a member.
Incorporation sets a level playing field for everyone and makes sure that the rules are applied evenly across the association, rather than leaving decisions in the hands of those with the largest egos and loudest voices.
If you are currently a member or leader of a property owners association and are considering incorporating, or if you have recently incorporated, you’ll need to have a series of votes to establish leadership and bylaws. Once you incorporate, your POA will have to report annually to the state, so be sure and check your local laws and consult an attorney before incorporating.
One way to efficiently, securely, and conveniently carry out an election is to use an online voting platform like ElectionBuddy. Our easy-to-use system makes it simple to set up votes, send out ballots, and collect and announce results all through one simple dashboard.
Property owners associations are powerful tools. While they can remain unincorporated, in order to have power over their members and in the legal sphere, incorporation is the best path forward.
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