HOA, COA & POA: Understanding the Differences
There are many factors that contribute to a successful community, including neighborhood camaraderie, maintenance and appearance, and general oversight. Several of today's neighborhoods come with a homeowners' association (HOA), condominium owners' association (COA), or property owners' association (POA) to ensure they continue to be desirable places to live long-term.
These organizations are critical to preserving the strength, beauty, and future of a community, but some residents aren't clear about exactly what they are, how they operate, or why they exist. Read on as we explore the differences among HOAs, COAs, and POAs, what sets them apart, and what they can do for neighborhoods.
Homeowners' Association (HOA)
The most common type of association is an HOA. Created for individuals who own their homes and lots, HOAs typically govern planned developments with single-family homes. As the original type of association for communities, they first came to prominence as subdivisions expanded during the post-World War II building boom.
What’s the purpose of an HOA?
The purpose of an HOA is to help manage a collection of homes. HOAs are non-profit organizations tasked with maintaining community-wide standards, including home design and upkeep, land use, and other criteria that affect the neighborhood. The guidelines of an HOA ensure everyone's property values are protected.
How do HOAs operate?
A board of directors is responsible for the operations of an HOA. Newer communities may still have boards controlled by builders and developers. Board members are volunteers who work to enforce governing documents, manage financial aspects, and maintain common areas. Essentially the lawbook by which everyone in the community abides, an association's governing documents detail specific board tasks, powers, and duties. While association residents elect the members of the board, their responsibilities are unique to their HOA—and each community operates differently.
What do HOA fees cover?
Owners who live in a home with an HOA are generally required to be members and pay fees to fund operations. Money from HOA fees goes toward a wide variety of uses. Most often, these cover upkeep of common areas and amenities, common area insurance, and other shared costs for the community. Usually, some money is set aside for reserves or future projects, as well.
Condominium Owners’ Association (COA)
A COA bears many similarities to an HOA, with one notable difference: the community is made up of condominiums.
What’s the purpose of a COA?
COAs and HOAs have comparable purposes. In fact, COA and HOA are frequently used interchangeably. However, what makes them unique is the ownership style in each community.
In an HOA, residents own their property, but the association owns and maintains common areas, such as lobbies, pools, clubhouses, and gyms. Conversely, in a COA, owners own their individual units and a percentage of all shared property, like tennis courts, sidewalks, and parking lots. The COA doesn’t own anything, but it ensures the items that serve multiple units are maintained. Residents are still typically responsible for maintaining the components that serve their individual units, like pipes, windows, appliances, and HVAC equipment. Understanding this difference is important, as it constitutes the procedures and policies that drive operations and informs decisions surrounding taxes, insurance, refinancing requirements, and more.
How do COAs operate?
Other than the ownership structure, COAs and HOAs work very similarly. Much like an HOA, an elected board of volunteers operates the condominium association on behalf of all owners. Both are non-profit corporations with governing documents that govern the day-to-day operations and how they’re funded.
What do COA fees cover?
All condominium unit owners are automatically condominium association members and must pay fees to cover general maintenance and services for common elements, like parking garages, roofs, stairwells, and elevators. Sometimes, fees cover utilities like water, sewage, and trash removal. Each condo owner will likely pay a different amount based on their percentage of ownership.
Property Owners’ Association (POA)
From residential and commercial buildings to open spaces, businesses, and even entire towns, POAs govern large areas that can encompass HOAs and COAs. Commonly viewed as an advocacy organization, POAs have a very limited scope of enforcement power and authority.
What’s the purpose of a POA?
POAs are formed to help encourage development in an area or, conversely, to protect the undeveloped nature of a community. Widely regarded as a networking opportunity, POAs influence local policy and commerce, drive real estate, and facilitate business licensing, zoning rules, and neighborhood projects and events.
How do POAs operate?
A body of business owners, property managers, developers, and investors who have a personal interest in improving the community, POAs operate to boost industries or interest in the area but don’t require an elected board of directors to do so. POAs may offer local educational opportunities or networking events to enhance the community, but they don’t usually have many regulations, can’t issue fines, and don’t own common areas.
What do POA fees cover?
Membership in a POA isn’t always mandatory, though members may enjoy an additional say in the community. While POA members may have to pay a modest annual fee to support community efforts, POAs are often funded through donations.
How a Community Management Company Can Support Your HOA, COA, or POA
While HOAs, COAs, and POAs may sound similar (and are, in many ways), it's critical to keep their differences in mind. Regardless of which fits your community, they're an excellent choice for maintaining and improving the quality of life and the condition of a building or development. Still, some communities are intimidated by the work required to operate an organization and manage day-to-day duties. That's where a professional community management company comes in. Read our article, “6 Reasons Your Community Should Hire an HOA Management Company,” to learn how a management company can help ease the burden of your board and set your community up for success.