A property owners association is often referenced in state laws in Texas. This can cause some confusion, especially for those who live in or run a homeowners association. It is important to understand these terms and whether they differ.
What is a Property Owners Association in Texas?
Homeowners associations are very common in the United States. In fact, there are more than 21,000 of these associations in Texas alone. The purpose of an HOA is to govern the management and operation of communities, protect property values, and ensure owner satisfaction.
It is also worth noting that Texas law refers to HOAs as property owners associations. But what is a POA anyway?
A property owners association (POA) is an organization formed to manage and enforce rules within a residential or mixed-use community. In Texas, the term POA is used in state laws to describe what many homeowners would typically call an HOA.
Texas Property Code Section 202.001 defines a POA as:
“[A]n incorporated or unincorporated association owned by or whose members consist primarily of the owners of the property covered by the dedicatory instrument and through which the owners, or the board of directors or similar governing body, manage or regulate the residential subdivision, planned unit development, condominium or townhouse regime, or similar planned development.”
Key Features of a Property Owners Association in Texas
In Texas, property owners associations have certain key features. First, a declaration, deed restrictions, or bylaws establish them. When first developed, these documents form the community as a legal entity.
They also govern planned communities, subdivisions, townhome complexes, or condominium associations and enforce restrictions, rules, and regulations to maintain the community’s standards and property values.
A key feature of a POA in Texas is that it collects dues or assessments from the property owners. These funds various expenses, such as common area maintenance and amenities.
Finally, a board of directors manages and oversees a property owners association. These directors are volunteer homeowners who other homeowners elect.
Texas law does not distinguish between HOAs and POAs in its legal definitions. Under the Texas Property Code, all such associations are referred to as POAs.
HOA vs POA
While Texas law officially uses the term property owners association, homeowners often use homeowners association to describe the governing body in a residential community. What is the difference between an HOA and a property owners association?
Homeowners Association (HOA)
This term primarily applies to residential communities like single-family home neighborhoods, townhomes, and condos. These associations enforce community rules through the CC&Rs, bylaws, and rules and regulations.
Membership is often mandatory, which means those who buy a home in the community automatically become members. An HOA also focuses more on the maintenance and management of amenities, landscaping, and home aesthetics.
Property Owners Association (POA)
This is a broader term that covers all types of property-related associations, including HOAs. Property owners associations can govern both residential and mixed-use communities. This includes developments that rent out to businesses.
Property owners associations follow the same legal framework as homeowners associations in Texas. Even though some communities may call themselves a HOA, Texas law does not distinguish between HOAs and POAs.
According to the Texas Property Code, all such associations fall under the umbrella term “property owners association.” Section 202.001 is more specific in its definition of a POA.
What are the Texas Property Owners Association Laws?
Texas has a comprehensive set of laws governing communities, including HOAs. These laws are designed to protect homeowners’ rights and associations’ authority to manage their communities.
Here are the laws that govern a property owners association in Texas.
Restrictive Covenants
Chapter 202 of the Texas Property Code governs how POAs enforce restrictions and architectural guidelines within a community. It ensures that associations apply the rules uniformly, which means that associations can’t enforce the rules arbitrarily or discriminatorily.
Under this law, homeowners can also challenge restrictions if they think they are unreasonable. An association’s architectural guidelines must also be outlined clearly in the governing documents.
The Texas Residential Property Owners Protection Act
Found under Texas Property Code Chapter 209, this chapter provides additional protections for homeowners. It outlines what POAs can and cannot do.
Key provisions under this Act include the following:
- Homeowner Rights. Homeowners have the right to receive notice before fines or enforcement actions.
- Dues Collection. POAs can charge dues and assessments, but they must follow strict rules for collecting unpaid fees.
- Lien and Foreclosure Protections. POAs have the right to place liens on homes for unpaid assessments. If a POA wishes to foreclose on a home, there are strict regulations and specific steps to follow.
- Board Transparency. POAs must hold open meetings and provide homeowners with access to financial records.
- Architectural Review Process. Homeowners must have a clear and fair process to request modifications to their properties.
Texas Condominium Act & Texas Uniform Condominium Act
These acts govern condominium associations, which also fall under the category of POAs.
The Texas Condominium Act (Chapter 81 of the Texas Property Code) applies to condominiums created before January 1, 1994. The Texas Uniform Condominium Act (Chapter 82 of the Texas Property Code) applies to condominiums created on or after January 1, 1994.
These laws regulate condo associations, unit owner responsibilities, dues collection, and dispute resolution.
Texas Nonprofit Corporation Act
Most POAs in Texas are structured and organized as nonprofit corporations under the Texas Business Organizations Code (Title 2, Chapter 22). This law regulates how POAs must operate as corporations. It also covers the responsibilities and fiduciary duties of board members.
Furthermore, this Act outlines the requirements for voting, meetings, and financial management. Because many POAs are incorporated as nonprofits, they must comply with both the Texas Property Code and the Texas Nonprofit Corporation Act.
The Final Word
While a lot of people use the terms HOA and POA interchangeably, they all fall under the term property owners association in Texas. It essential to understand the definitions and laws that apply to these associations, especially for homeowners and board members.
Preferred Association Management Company offers exceptional HOA management services to communities in Central Texas. Call us today at 512-918-8100 or contact us online to learn more!
