< Back to blog
Real Estate in Bermuda, Extended Stayers

What is a Homeowners' Association?

6 minute read

When buying a condo or an individual property within a residential community, you’ll need to join and contribute to the Homeowners’ Association. The Homeowner’s Association (HOA) exists to ensure that all of the shared amenities are looked after and that all homeowners contribute to the wellbeing of the whole property, not just the condo they are buying. 

Before committing to a condo, you should research their community association and determine exactly how much you’ll need to pay and what the fees will cover. Before we talk about costs, let’s determine exactly what a Homeowner’s Association is and what it does.

A Homeowners’ Association: The Basics

We often find that a buyer of a condo is surprised by the HOA fees they’ll have to pay once they own the property. For many, it’s not something they’ve ever come across before and they’re frustrated when yet another bill needs paying. 

HOA fees vary depending on the kind of building or community your property is a part of. The more upscale it is and the more amenities available to residents, the higher the fees.

An HOA is an organization within a housing complex or building that creates and applies community rules. Anyone that owns a property is automatically a member and is required to pay monthly fees.

Why do HOAs Exist and How do they Work?

As everyone lives within the same complex, everyone should be equally responsible for the upkeep of communal areas and facilities. Residents pay a fee each month or quarter and the money collected goes towards maintaining everything from the landscaping and sidewalks to security gates and the building’s exterior.

You’ll be required to pay fees that cover the maintenance and repair of communal facilities and amenities. As all of the homeowners pay into the HOA, reserve funds will accumulate over time. These funds are used to pay for any extra expenses that might be needed, like a roof repair or if a new elevator needs adding to the building.

The HOA might from time to time issue special assessments if they have insufficient funds to carry out a major project and need to request more money from homeowners. If you were to fall behind on monthly payments or refuse to pay extra costs, you could be given a legal document called a lien, which basically guarantees you’ll repay the debt. This protects all other property owners and ensures that the property is well-maintained. 

Although it’s another cost to think about, it’s clear that the HOA is for the benefit of the whole community. The work the HOA does improves the quality of life for all the residents and helps to protect and enhance property asset value. Happy residents make the complex a good place to live and a well-maintained building protects property prices if you eventually want to sell.

But for you to receive the benefits of the HOA, you also need to comply with its rules and regulations.


Homeowners’ Associations: The Rules

HOA structures vary from development to development. There is normally a management team comprised of representatives from the owners and from the developer or management company. 

Together, they control the HOA and ensure that the HOA’s rules and regulations are applied across all owners. If a homeowner consistently breaks the rules, they can be given extra fees to pay, force to comply or even have to deal with legal repercussions.

The HOA that you’re a part of will set out covenants, conditions and restrictions that you’ll be required to follow. Depending on the kind of development you live in, these rules could cover the color of your door, whether or not you’re allowed pets and even if you’re allowed to hang laundry outside to dry.

To do anything outside what the HOA permits, you’ll need to apply for a variance. You’ll need to convince them and the majority of other owners, that what you want to do is acceptable. Because of this, it’s always important you research the HOAs rules before committing to purchasing a condo. You don’t want to sign a contract only to find the complex doesn’t allow pets, for example. 

For some, the rules and regulations are a small inconvenience, but others dislike the idea of being told what to do in a property they own. Meet with the HOA president to get a feel of the board. You’ll probably find them to be reasonable, understanding and they’ll likely have been living in the building for several years. This makes them great information sources for any questions you might have.

You’ll probably find you have a balanced relationship with an HOA. They stop your neighbors from owning 20 cats, but they might expect you to carry out maintenance on your property that you would rather put off.

Thinking About Buying a Condo? There’s More Than the HOA to Consider. Take a Look at Our Free Checklist and Guide

An HOA is just one of the many important factors you’ll need to consider as you buy a condo. It’s a different process to buying a fee simple (or freehold) house, so it’s vital you make sure you’ve completed each step correctly.

We’ve put together a comprehensive buying checklist to make the process as simple and stress-free as possible. It covers finding a vendor, questions to ask on a visit and the legal paperwork you’ll need to complete as the sale progresses.

Get your hands on the condo buying checklist by clicking on the link below.

Buying a Vacation in Bermuda Guide