is stunningly beautiful country. We are so blessed to be here. Bermuda is also a small community with finite resources. Open space is becoming a premium; those fortunate enough to still have it, hope to be able to preserve it. We all know that housing is tight and the cost of a single family home has escalated almost beyond the reach of middle class income earners. Some families have pooled financial resources and banded together to purchase or renovate properties unaffordable on one family income. They have created family condominiums without the physical and legal constraints of a formal entity called a condominium association. While we love our families, warts and all, in some cases these family property purchases should probably be reviewed more carefully (in a legal sense) so that we can all continue to live in harmony afterward.

For many families, however, the first rung up the ladder of home-ownership is purchasing a condominium. Surprisingly, in Bermuda there are many selections; some containing as many as 30-40 units, others as small as only four units.

Condominiums can be tastefully designed to fit compactly into spaces that a single-family unit cannot. The legal language of the condominium document can dictate that all remaining open land in the association grounds be left open permanently for all to enjoy. Many rules and covenants are typically put into place so that all residents can have in the classic real estate sense, "the right to quiet enjoyment of their home''. This kind of eliminates having your own egg-laying free-range chickens (and a rooster) in your back yard (although I bet half the time you chase off those feral ones who waltz up without permission just like they owned the place) and things like clotheslines. I have a personal agenda about the right to a clothesline utilising 340 days of sunshine a year. Remember, readers, every time you use the dryer it is FIVE DOLLARS right out of your pocket. I digress, pardon me. What many first-time condo homebuyers do not realise it that they also have a vote on many of these rules, since they are also percentage owners in the association.

On August 19, 2000, Personal Finance provided an extensive article on the intricacies of purchasing a home. It is my hope that you will be able to use this information also in your search for a permanent home.

Condominiums are very unique items. First of all, the legal concept defines that everyone own their own home within the inner walls of the dwellings, but that the outside walls and everything further out from that be owned commonly by the entire condominium association of which you are a part even though you only own the inside! Now that is quite a sentence. This creates the interesting situation where all of the common areas including the outside walls are maintained through the collections of the condo fee, but the insides of each condo are treated like separate homes. Everyone, generally, has their own mortgage for which they are personally responsible for, totally separate from the assets and liabilities of the condominium association.

The condominium association, for their part, not only must collect the condominium fee every month, but must also run this association as a business.

It has debts, utilities, water, landscaping, and road maintenance, pool maintenance, insurance for fire, catastrophic events, and so on. And since everyone owning a condo generally is employed during the day (or is an absentee landlord, more on this later), many condominium associations in turn will hire a management company to handle all of these business affairs. So, there is now another layer added to the stratification; the homeowner inside, the condo association outside and the management company...way outside.

Your monthly condominium fee is broken into several different chunks, part to running the condo association business, part to the management company to oversee the maintenance (and rental of some units, etc) and most, I cannot emphasise enough, the most important and usually the biggest part of your monthly condominium fee is set aside to be invested in the capital reserve account for future contingencies and repairs. What are those? Major painting jobs of the entire complex; roofing replacement, re-enforcement of structural outside walls after storms and so on. What you may not realise is that as a condo homeowner, it is your right (and your duty) to be sure that the capital reserves are fiercely collected from everyone in the complex and just as fiercely protected for the future. Have you heard of the term "special assessment''? For the record, this assessment may occurs when there is not enough in the capital reserve (for whatever reason) to pay for a major structural repair.

Next week, we will discuss the many questions that you should ask and the many issues you should be aware of before you buy your home. After all, for most families, it is the biggest purchase of their entire lives and you have a right to be fully informed of all the facts before you make your final decision. There is an old Latin expression, just as true today "caveat emptor''. Let the buyer beware.

Under no circumstances does the information in this column represent a recommendation to buy or sell stocks or any other investments. Readers needing specific assistance should seek professional advice from their financial advisor.

Martha Myron CPA is a Bermudian, a Comprehensive Financial Planner, holds NASD Series 7 licence and is a US tax practitioner. She is Programming Chair for the Financial Planning Association/Bermuda. Questions regarding this article may be sent to at Email: marthamyron(at)northrock.bm