HOA vs. POA

Started by TheD1 • 17 replies • 7276 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

TheD1 (Georgia)
Posts: 6

Posted:

We live in a 2000 Home HOA Community in Georgia. The BOD is pushing to vote for a POA to replace our existing HOA. Not much benefit seen in this change but would like to know others opinions about the PROS and CONS of having this change made to a POA, after having ten years plus under out HOA covenants. Always thought a POA was set up moreso to a CONDO Association and an HOA to a Homeowners Association. The Vote for changing this over has gone on for almost a year now in trying to get support behind it, and the % is not in favor of it changing yet. Aren't there any rulings about the amount of time it should take to finish the voting period AND how soon after something is voted down could it resurface back for another new vote? Lots of questions on many minds and not enough backing it to support why the urge to change, other than a better upperhand in collecting overdue fees and charging fees on resales.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Since they are very similar things, I'm not sure what benefits would be gained (unless there are different laws associated with each). What were the pros and/or cons offered by the Association for doing this?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

A POA is a Property Owner's Association. A HOA is a Homeowner's association. There's not much difference between the two. The only major difference would be that with POA's it property with no homes on it while HOA's property have homes on them. So do you have empty lots? Are their owners who only own lots with no houses? Need a better definition of the property/homes involved. Seem like a game of "3 card monte" to change it otherwise...

Former HOA President

LarryB13 (Arizona)
Posts: 4,099

Posted:

Up until now I was unaware that there is any legal distinction between HOA and POA.

My association is called a POA because the rural 36+ acre parcels were sold as undeveloped land. The developer was selling land, not homes. Our association's sole purpose is to maintain our dirt roads. Arizona makes no distinction between HOA and POA and does not use those terms in the statutes, calling them planned communities.

How would things change if the HOA became a POA?

HoaC (Florida)
Posts: 95

Posted:

Technically speaking, a HOA attaches to the home. If the ownership of the home changes then you loose what ever is attached to the home. This really especially applies to land with modular and or mobile homes. The concept is, the land never changes, the ownership of the property changes. So, the land is what dues are paid on. In a HOA, dues are paid on the home. So, Sort of like splitting hairs.
But, in a POA. if a lien is on the property, the lien withstands foreclosure forever, if filed before foreclosure. Therefore has to be paid by the new or past owner at some period of time. With a HOA, the lien falls off one year after the owner takes possession. AS I understand it.

HoaC (Florida)
Posts: 95

Posted:

A POA really especially applies to land with modular and or mobile homes. The concept is, the land never changes, the ownership of the property changes. So, the land is what dues are paid on. In a HOA, dues are paid on the home. So, Sort of like splitting hairs.

EdC5 (Florida)
Posts: 117

Posted:

Quote:

Posted By HoaC on 08/16/2011 6:09 AM
Technically speaking, a HOA attaches to the home. If the ownership of the home changes then you loose what ever is attached to the home. This really especially applies to land with modular and or mobile homes. The concept is, the land never changes, the ownership of the property changes. So, the land is what dues are paid on. In a HOA, dues are paid on the home. So, Sort of like splitting hairs.
But, in a POA. if a lien is on the property, the lien withstands foreclosure forever, if filed before foreclosure. Therefore has to be paid by the new or past owner at some period of time. With a HOA, the lien falls off one year after the owner takes possession. AS I understand it.

Not necessarily true. What, at least in Florida, determines the structure of the owners assocation is how it's defined in the incorporating articles and the declarations. For example, my condo is a separate single family home but is a 'condo' because the declarations were written to fall under §718 rather than §720. This means even though it's a house all I own is from the "paint in." The house is a zero lot line and the lot it's on is a limited common element. By the same token, a row house structure could be set up under §720 rather than §718 making the owners responsible for the maintenance of their particular parts of the whole, e.g., roof, siding, etc.

As far as your example with mobile homes, the property could be set up as a §723 entity (Mobile Home Park Lot Tenancies) which has specific requirements. On the other hand, the property could also be declared as a §718 (Condominiums), §719 (Cooperatives), or §720 (Homeowners' Associations).

None of the legal structures address whether or not the land under their purview is developed or undeveloped, as the legal requirements and privileges are determined solely by the statute that governs the said association.

Edward J Cooke, CMCA, LCAM

CarolF (Florida)
Posts: 435

Posted:

When I googled the question I came across this article on http://atlantahoaservices.wordpress.com/category/ga
It was written in Feb.2011

Why Your Atlanta HOA May Want to Adopt the POA.

In 1994, the Georgia Legislature adopted the Property Owners’ Association Act (“POA”). The POA provides significant advantages to homeowners associations. Here are some of the most important advantages of the POA:

1. Automatic Statutory Liens

After submitting to the POA, an association no longer needs to file liens at the county courthouse for unpaid assessments or other charges. Instead, the POA creates an automatic statutory lien against a delinquent owner’s lot for any sums owed to the association. The POA provides that the declaration of covenants itself serves as notice that there is a lien on every lot in the community for any unpaid assessment or other charges. As a result, closing attorneys, title examiners, purchasers or owners must contact the association for a statement of any amounts owed to the association prior to concluding a sale or refinance of the lot, or risk the existence of a lien. If the association is not paid out of the proceeds of the sale or refinance, the lien continues against the lot and will generally have priority over subsequent liens and mortgages.

Another benefit of the POA’s automatic lien is that it protects the association even if the association’s records have incorrect or misspelled owner names. Recorded liens are only effective if filed under the correct owner names. If the association’s records have an owner’s name misspelled the recorded lien may be ineffective. The POA makes the lien effective, even if you have incorrect or no information about an owner.

2. Buyers and Sellers are Jointly and Severally Liable to Pay Assessments
The POA includes another provision that helps strengthen an association’s assessment collection powers. The POA makes buyers and sellers jointly and severally liable for all unpaid assessments. This means that, if the automatic statutory lien is not paid at the closing, the association can proceed against the new owner, who will be personally liable for all amounts owed prior to the closing.
3. Tenants are Obligated to Comply With Association Regulations
The POA also requires that both owners and tenants must comply with all the provisions of the declaration of Covenants and the association’s rules and regulations.
4. Fines and Suspension of Privileges
The POA gives homeowners associations a statutory power to assess fines against violators and to suspend the common area use rights of violators, if allowed in the Covenants. Fines constitute a lien against the violator’s lot, and the ability to fine significantly strengthens the association’s powers to enforce the Covenants and the rules and regulations.
5. Late Fees and Interest
Submission to the POA allows homeowners associations to charge a late fee equal to the greater of $10.00 or ten percent (10%) of the amount due, and interest at a rate of ten percent (10%) per annum on unpaid assessments and charges, if allowed by the Covenants.
6. Recovery of Attorney’s Fees from Owners
The POA authorizes the recovery of the association’s costs of collection of the delinquent assessments, including reasonable attorney’s fees actually incurred. This provision is extremely helpful with judges who otherwise are reluctant to grant the association its attorneys fees, when it sues delinquent or violating owners.
7. Perpetual Duration
Prior to 1993, Georgia law at Code Section 44-5-60(d)(1) generally provided that Covenants expire after twenty years. That statute was amended in 1993 to permit Covenants to automatically renew, but the Georgia courts have held that Covenants in communities that were recorded prior to 1994 do not receive the benefit of the new 1994 law. One of the most important benefits of the POA is that it has a provision that states Georgia Code Section 44-5-60(d)(1) shall not apply to any Covenants contained in any instrument submitted to the POA. That means that if a community’s Covenants were recorded prior to 1994, submission to the POA now will eliminate the possibility that the Covenants will expire after twenty years.

8. Ease of Adoption
In most communities, Board members can quickly and easily adopt the POA by obtaining the consent of the association members by mail or by going door to door, depending upon the specific amendment provisions within a community’s governing documents.

Once in place, the POA provides clear advantages to homeowners associations seeking to maximize their collections.

TheD1 (Georgia)
Posts: 6

Posted:

Thanks for all that have jumped in on this overnight. I can see there are benefits listed here for a POA but certainly there must be some other underlying factors that present the opposite side of the case as a potential negative to the POA. Really was hoping that someone here might have had their HOA change over and offer some lessons learned by switching over to a POA.

Our community is completely built out, has no empty lots except the COMMONS Property areas and that is a significant amount of land if added up. Can the POA end up providing voting rights to the common property lots owned by the POA and allow it to be the controlling vote on making change to the POA covenants if we change over to the POA? What about quotas for getting a vote passed through. Does a POA require the same % to pass the vote on changes as an HOA? Does the POA Board now have more control to take action without the Homeowners have a legal say in the decisions?

Too many Questions to answer. Most important is can a VOTE to go to a POA last for a period of a year or more without expiring the voting time frame if its not been successful? There must be some regulations regarding voting durations isn't there?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The POA should be owners too. Why wouldn't they work for the good of the homeowners? A HOA/POA is made up of the owners ONLY. (Unless developer controlled). Honestly, I don't get the reason for becoming a POA if the property all has homes on it.

Is this something as a way to get rid of the common areas? Letting each homeowner take that property into their own instead of shared?

I think the solution to your issues isn't changing the name of your organization, it's working together to make that organization work. It doesn't even sound like ya know what you have.

Former HOA President

TheD1 (Georgia)
Posts: 6

Posted:

Mel, thanks for your comments and yes, we are a fully owned and controlling HOA entity. A great one at that. The developers have moved on now and we are in full mode towards trying to move to a POA...for all the reasons that are noted in the previous post about Georgia Law and the POA benefits listed. That sounds Great on the surface.

I recently received this information by the PMA of our HOA: A vote to a POA never closes, until the required number of votes are received. We need 1688 votes, and only have 1372 at this time. The governing documents expire every 20 years, and have to be voted on (as an HOA....not a POA), so the board is using the funds for the HOA vote to push the POA, so that they will not have to keep renewing the documents. The POA never expires...not sure this is a benefit to us or not!

There are several types of votes. A board vote requires a majority vote to pass or fail an item. A shareholder vote (like an annual meeting) requires a quorum established and a majority of members present at the meeting to vote (either in person or by proxy) will pass or fail a vote. A special assessment vote requires ballots from all owners in response and a minimum of 51% of all owners to pass. The POAA vote requires 66% of the shareholders to vote to complete.

This is neither a Special Assessment Vote, nor a shareholder vote! What we have here is a vote to turn our HOA into a POA, plain and simple. What hasn't been explained clearly is why the urgent rush to do so under the new management? Why not before and what are the negatives in going this route? I find an open vote like this (for almost a year now) to be rather suspect. If the voters did not get their total Yes vote to change over, in a certain period of time, then I'd say its over, dead and not passed. I can't think of any previous vote taken that has been an open voting duration, waiting in desperation to change something over like this one. Some homeowners have changed hands here over the past year, and does that mean their vote is null and void and requires another vote from the new owners of a sold household? Amazing to me and wondering how this vote count would ever get sorted out and tallied correctly.

TheD1 (Georgia)
Posts: 6

Posted:

Still looking for any offer of advice of an HOA keeping a vote open for almost 4 years now without closing the vote based on its no pass results on whether to go to a POA, due to not reaching the 66% majority. Where is it written that this would be allowed in the HOA Covenant world.........anyone here on HOATalk can offer advice, opinions or facts on this?

TimB4 (Tennessee)
Posts: 21,059

Posted:

As I understand it, for any voting within an Association, the Board would establish how long the polls would be allowed to stay open. Unless the governing documents specify that the vote is to happen at a meeting, it may be possible for the Board to vote on an issue outside of a meeting.

You might want to determine if becoming a POA requires changing any of your governing documents. If it does, then the procedure to amend the governing documents would need to be followed.

As an example: If becoming a POA requires the Board to amend the CC&Rs or Articles of Incorporation to specify that it is now incorporated as a POA and the amendment procedure calls for a votes to be cast at a meeting - a meeting is required to be called. If no meeting is called the decision to amend the document might be able to be challenged in a court of law. The court would then make the determination if proper procedures were used or not.

Tim

TheD1 (Georgia)
Posts: 6

Posted:

Tim,
Thanks for your reply and all good points. I've started to sort into the CC&Rs to determine some you mention. As I understand it, we need to have every Homeowner accounted for in this vote to go the the POA, as it involves changing some of our Covennats and the lending institutions will want to know this in our contracts being adjusted.Thus far we are short about 300 Homeowners who have not voted.

I've also been told that the vote could run on 10 years or more out until they have received the total vote count. Not sure how they would keep track of those homes lost to foreclosure, new owners or homes abandoned or being rented?

What is the appropriate way as a HOA to close on something like this if it has been going on for 4 years now and looking like no end is in sight? The Boards next plan is to have the Community Managers go door to door, after failing on the news letters and email blasts, prizes for voters push and other means of getting the voters out.

The POA all sounds great on the surface for collecting bad debt, b still would like to know what some of the Cons of going to a POA are, if anyone out there has any experiences where the POA may not have worked out for the HOAs best interests.

Don

LawrenceC1 (Georgia)
Posts: 480

Posted:

Big D,

In Georgia there is a special distinction made between an HOA and a POA. In Georgia, an HOA is a common-law contract between homeowners. In Georgia, a POA is a community that conforms to the Georgia Property Owners Association Act (O.C.G.A. sections 44-3-220 through 44-3-235).

In 2009 our homeowners association made the required changes to our covenants to become a POA under Georgia law. The biggest benefits were:

1. We can now foreclose on delinquent accounts even if there is a first mortgage lien superior to our claim. As a common-law HOA we would have had to pay off any first mortgage before foreclosing. This gives us considerable leverage dealing with problem accounts.

2. It eliminates the possibility that Georgia law would cause our CC&Rs to expire after 20 years.

3. Any assessment we levy against a homeowner gets the benefit of an automatic statutory lien -- we don't have to file every charge with the court

4. We can charge late fees of up to 10% of the overdue amount.

5. We are guaranteed recovery of attorney's costs when dealing with delinquent accounts.

6. The Act establishes the legal basis to levy and collect fines in the same way as other assessments.

7. Any future amendment to the Covenants will apply to all homeowners even if not all the homeowners voted for the change.

TheD1 (Georgia)
Posts: 6

Posted:

L"C"
We have an HOA that is $450K in arrears in combined late dues,interest and fees, etc, some going back for ten years now (about 10% of our total homes). We are an HOA that has been filing liens on properties as an HOA, not POA. We can't assume any land holdings under foreclosure because we are a non-profit entity whether under an HOA or POA, so eliminates any holding of properties. We have been grandfathered in as a renewal of our covnenats every 20 years, so no benefit there. We do assess late fees of 10% under our HOA and are adding legal fees for delinquent accounts. We are collecting fines and outstanding fees in our regulatory manner (over $200K just this year).

The last one you mention about is most likely a negative in that we as HOA members need a vote that counts in order to change our covenants and make amendments, and keeping control of that % required is most important.......so no real benefit to the individual.

What other measures can the HOA take to step up the collections on the late payments in this economic downturn so that it doesn't start feeding on itself?

How must the Board present these missing in future budgets such that the HOA better understands what we are up against and how are future budgets to account for these outstanding amounts?

Would there be any other reasons to not go to the POA, as I'm not seeing much offered for heading in that direction that really keeps the homeowner in control.

LawrenceC1 (Georgia)
Posts: 480

Posted:

Quote:

Posted By TheD1 on 08/27/2011 3:46 AM

We can't assume any land holdings under foreclosure because we are a non-profit entity whether under an HOA or POA, so eliminates any holding of properties.

Big D,

Most homeowners associations in Georgia are organized as a Georgia Non-profit Corporation under sections 14-3-101 et seq. of the Georgia laws. This does not limit the corporation from owning property or foreclosing on delinquent accounts. In fact, there are sections of the law that specifically refer to that right. Is there something in your Articles of Incorporation or Bylaws that make your association different?

The threat of foreclosure is a powerful tool in getting a homeowner to come to terms and settle an outstanding debt.

LawrenceC1 (Georgia)
Posts: 480

Posted:

Quote:

Posted By TheD1 on 08/27/2011 3:46 AM
The last one you mention about is most likely a negative in that we as HOA members need a vote that counts in order to change our covenants and make amendments, and keeping control of that % required is most important.......so no real benefit to the individual.

Big D,

The POA law doesn't change the percentage of homeowners required to approve a change in your governing documents. That is written in your Bylaws, and is usually 2/3 of the members or some similar provision.

What the POA law will do is make any change that is approved applicable to the homeowners who didn't vote for it.

Say for instance that an association had 100 members, and the bylaws required 2/3 to approve an amendment. And let's say that a proposal to limit rentals in the community passed by a vote of 70-30. What the POA gives you is the ability to enforce the new rental amendment on the 30 homeowners who voted against the measure.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here