What Is a Property Owners Association?

Property owner associations (POAs) act as the backbone of thriving residential and commercial communities. They assist in maintaining order and managing shared resources, but they are often confused with homeowners associations (HOAs). The importance of their roles is also sometimes overlooked. 

What Is a POA?

By definition, a POA is an organization established to manage and administer shared resources within a community. These amenities could include:

• Parks
• Playgrounds
• Swimming pools
• Tennis courts
• Landscaping
• Building facades
• Much more

The association aims to maintain and enhance the overall value and quality of the properties within the community it governs.

Who Is a Part of a POA?

Typically, individuals and businesses that own properties within a specific area automatically become part of the POA. As members, they have certain rights and responsibilities, such as:

• Voting in association elections
• Abiding by the association's rules and regulations
• Contributing to the maintenance of shared resources

In addition to property owners, property managers, tenants, local government representatives, service providers (property maintenance, security, etc.), and other interested parties can be a part of a POA.

How Is a POA Formed?

1. Property Development Planning

When a property developer acquires a tract of land, they design a master plan for the development that covers all aspects of the community, including:

• The layout of the physical site
• Number and types of properties to be built
• Location of common areas and amenities
• Special features or restrictions

The master plan is approved by the relevant agencies and becomes a publicly available document that anyone can read or review.

2. Creating Governing Documents

Once the master plan is in place, the developer creates the governing documents for the POA. These documents include:

• Declaration of Covenants, Conditions, and Restrictions: These rules regulate allowed activities and cover areas like architecture, maintenance, pets, and noise. They are designed to maintain a cohesive community.

• Bylaws: These outline how the POA will operate, including board responsibilities, elections, meetings, and financial matters.

• Articles of Incorporation: These are legal documents that formally establish the POA as a governing entity. They provide the association's name, purpose, address, initial board members, and other vital information.

3. Sales and Transfer of Control

As properties are constructed and sold, the developer initially retains control of the property owners association. During this first phase, the developer is responsible for managing the community, enforcing the rules, and maintaining common areas and amenities.

However, the developer's control is not meant to be permanent. When ownership of a certain percentage of the developed properties is transferred to third parties, control of the POA is transferred to the property owners. This ensures that the community's members have a say in how it is managed.

4. Transfer Control to Property Owners

As part of the transfer of the POA to property owners, an association election is held to choose the initial board members. 

The board members are usually members who volunteer to take on leadership roles in the community. Moving forward, they take over the responsibility of managing the association and making decisions on behalf of the property owners.

5. Active Community Management

Once the control is transferred to the property owners, the POA becomes a self-governing entity. The elected board works with members to uphold the governing documents, maintain the community's infrastructure and amenities, enforce rules and regulations, and manage the association's finances.

Differences Between POAs and HOAs 

POAs and HOAs are sometimes confused but differ in two major aspects:

• Governing scope: ‘POA’ is a broader term that can encompass other associations that govern various types of properties, such as gated communities, condominiums, and planned developments. On the other hand, ‘HOA’ specifically refers to associations governing single-family homes within a planned community.

• Membership: Membership in a POA may include property owners and other interested parties (tenants, businesses, service providers, etc.) depending on the association's rules. HOAs, however, consist only of homeowners.

Wondering if a property owner can withdraw from a property owners association? Take a  look at our recent article!