What is a Homeowners Association (HOA) and how can you benefit from it?

April 2024

In this article, we’re going to delve into the topic of homeowners associations, explaining what they are and how you can benefit from them as an owner or host of holiday rentals. A homeowners association (HOA) should not be confused with a neighbourhood association, but don’t worry, we’ll explain the differences shortly. Keep reading!

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What is a homeowners association?

Essentially, a homeowners association is an entity formed by all the owners of a property. It’s important to emphasize that only owners are considered as such, not those who live under a rental agreement. The homeowners association, also known as HOA, is responsible for managing the rights and duties of these individuals. Therefore, all owner-neighbours have the right to participate in the decisions made regarding the building.

Each one owns an exclusive property, whether it’s a residence or a commercial space, but they also share common elements. Every homeowner association must have a president, a secretary, an administrator, and a board. In some cases, there may even be vice presidents. All owners must comply with a series of obligations regarding the common areas, such as staircases, terraces, landings…

But is the homeowners association a legal entity? No, it lacks legal personality. However, concerning holiday rentals, any owner can rent out a vacation apartment if they wish to do so. Private residences can be used for activities that the owner deems appropriate within the legal framework. Even if the neighbours disagree, as long as it complies with coexistence regulations.

What is the difference between a homeowners association and a neighbourhood association?

Although they may not seem so, there are significant differences between the two. Firstly, the homeowners association consists solely of homeowners and landlords, as mentioned earlier. In contrast, neighbourhood associations include all residents of the same building, both owners and tenants.

Furthermore, homeowners associations do not have the same rights and obligations as neighbourhood associations. The former, for example, must meet the homeowners association fees. And regarding meetings, while those of homeowners are held regularly, those of neighbourhood associations do not carry as much weight or power.

There are also clear legal differences. In Spain, the regulatory framework for homeowners associations is governed by laws, whereas neighbourhood associations have more of a guideline status; it’s not a legal document, it only serves as a reference. Therefore, there are clear distinctions between the two types of communities.

Benefits of a homeowners association

One advantage of the homeowners association is the shared common areas. As they are communal, expenses are lower, and facilities are less expensive. A good example of this would be installing a pool. Additionally, maintenance costs are also lower. You will also have the right to make decisions about the property, and for this, there are different types of votes for the homeowners association where you will always have a voice.

Of course, getting along with your neighbours will only bring you benefits, and this could be very helpful in solving problems. Meetings are spaces for discussion and to preserve the maintenance and conservation of the building. It’s also the ideal setting for proposing improvements. This is important because the better the building looks, the higher the value your home will have.

A great advantage of being part of a homeowners association is that if you rent out your home as a holiday rental, your neighbours can assist your guests with any unforeseen circumstances. They can even inform you of any issues that have occurred even if your guests haven’t communicated them to you.

Obligations of a property towards the homeowners association

Among the obligations of the homeowners association, we find the need to adhere to the Horizontal Property Law and the community’s own statutes. This regulation is necessary to manage the common areas of the building. The most important obligations of the owners are as follows:

• Maintaining the building in good condition.
• Fire extinguishers must be operational and ready to use.
• It’s not allowed to carry out works at an individual level that alter the building.
• The obligation to have insurance coverage against fires and other disasters.
• Contributing to a reserve fund to cover expenses.
• It’s also mandatory to keep the electrical installations in good condition.

Compliance with regulations is mandatory for all owners alike. Everyone must ensure the welfare and safety of the common building. Therefore, it’s important to inform your neighbours of your decision to rent out your property. Attending meetings to see what kind of decisions are made is advisable, as some will affect your finances.

Types of votes in the homeowners association

Next, we’ll explain what these types of votes consist of. On one hand, there are unanimous votes, where there is unanimous agreement among owners. Then, there are votes by a reinforced majority, where 3/5 of the neighbours must vote in favour. There is also a simple majority, where half of the neighbours plus one must be in favour. On the other hand, one-third votes determine that one-third of the owners must agree. And finally, we have the votes required depending on the agenda, which will not always require the same number.

Holiday rentals have set records in 2023

In 2023, holiday rentals in Spain have reached record numbers. And the trend is expected to continue rising in 2024. If you want to avoid problems with your neighbours, we recommend that you select your guests and not accept just anyone. You can have them fill out a small form or simply talk to them directly.

Most of your neighbours will understand that you opt for holiday rentals since it’s your second home. And they will appreciate you as a neighbour if you comply with the current coexistence regulations and look after their well-being and that of the property. Additionally, every year, the supply of holiday apartments increases, as it has become a widespread practice within homeowners associations.

It’s expected that holiday rentals will continue to rise in 2024. And as tourism has picked up so much in recent months, it’s estimated that holiday rental bookings will grow or at least remain stable compared to the previous year. It’s undoubtedly a good time to start a holiday rental business, as demand is increasing. The rate will depend on the conditions of your apartment and its location.

How can I turn my home into a holiday rental?

You’ll have to talk to your neighbours first. You might ask yourself: can I rent out my home for holidays anyway? Yes, but it would be advisable to notify them. You also need to register your home as a holiday rental and, of course, have it well-prepared to accommodate your future guests. Likewise, it’s essential that it’s furnished.

At Holidu, we advise you to establish rules for your tenants. This is essential for proper coexistence with the rest of the neighbours. Basic rules such as not making noise late at night. Then, you can access a holiday rental website to start advertising your property.

But how do you advertise a holiday home? You need to remove personal photographs from all rooms of the apartment and provide information about the services they will find in it (hairdryer, television, washing machine, etc.). Based on what users see and read, they will choose one apartment or another. The holiday rental portal will help you gain visibility, as competition in this sector is currently huge.

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