I find that there is so much information readily available regarding sectional title
schemes, but when it comes to homeowners’ associations (HOA’s), including master
homeowners’ associations (MHOA’s), property owners’ associations (POA’s) and
security enclaves, information on this type of community scheme is not as freely
available or relevant. When doing a Google search, I normally get directed to
condominiums in Florida, USA! This article will aim to give you a better understanding
of HOA’s in SA, but it must be remembered that each HOA is unique in that it has its
own governance documentation, which has been prepared to meet its specific
requirements.
Let’s kick this article off with the question of what is an HOA? An HOA is a community
scheme as defined by the Community Schemes Ombud Service Act, where each
registered owner of an erf, as subdivided on the approval of the Local Authority, is a
member of the HOA, automatically by virtue of their ownership of such an erf, as bound
by a Title Deed condition, sale agreement and governance documentation of the HOA,
and who has rights and responsibilities in regard to the common areas within the HOA.
Although each erf is exclusively and independently owned, unlike sections in sectional
title schemes, the shared interest in and benefit of common areas is similar to each
owner’s undivided share of the common property in a body corporate, forming units.
As such, an owner of an erf is directly responsible for the maintenance, repair and
replacement, improvement, insurance and rates of any building or structure erected
on their erf, including their erf to the shared boundaries. The common areas are
maintained, repaired and replaced, and improved by the HOA, on the instruction of the
trustees or directors, and subject to any required member approval. The costs
associated with the common areas are divided amongst the owners, generally
equally.
You will have noticed that I mentioned governance documentation and trustees or
directors. Now, there are two different types of HOA’s, being those established in terms
of the Common Law, and those registered as non-profit companies in terms of the
Companies Act. The first type of HOA is governed in terms of a constitution, and often
supporting documentation, such as estate or conduct rules, and architectural and
landscaping guidelines, initially prepared by the developer and later amended by the
members, lodged with the local municipality, managed by a trustee committee. The
second type of HOA is governed by a memorandum of incorporation (MOI) with rules
approved by its members, both requiring submission to the CIPC. There are also rules
prepared by the directors, and sometimes architectural and landscaping guidelines.
The MOI is similarly prepared by the developer and later amended by the members;
a copy always being submitted to the CIPC for registration.
Let’s go back to the common areas and costs recovered from the members. The
common areas are parts of the development capable of being used by all members,
such as roads (if they are not public), boundary walls around the development (and
not necessarily those between erven), the entrance and exit, access control system
and security infrastructure, estate managers office, clubhouse, tennis court, driving
range, golf course (unless this is a privately owned erf or public land subject to a
lease), swimming pool, gym, pathways and walkways, verges or sidewalks, parks,
dams etc. Some MHOA’s and POA’s do not have as much common areas, as these
schemes may be the umbrella associations to an HOA or a number of HOA’s and
sectional title schemes, with their own common areas or common property, where the
MHOA and/or POA is simply responsible for the main entrance and exit, boundary
walls and main roads. A security enclave has very little, if any, common areas, as the
roads remain public, and there is no access-controlled entrance or exit, rather common
services such as security patrols and armed response, the main focus of such a
scheme being security hence the name. As such, the levy will be relatively low and
member participation may be minimal. For all these common areas and services,
charges are incurred, such as security, electricity, water, sewerage, cleaning,
maintenance, management, administration etc., which costs are recovered from each
member in the form of a levy, which, as mentioned earlier, is generally recovered
equally, but in some instances, such as a multi-layered development with a MHOA or
POA, HOA’s and bodies corporate, the levy may be recovered as determined by the
governance documentation of each scheme and / or the trustees or directors, in
accordance with the use of the common areas by certain members or the sizes of
ervens and / or sections.
At the establishment of many of these developments, the developer is excluded,
mostly on unsold or undeveloped erven, from contributing towards the expenses of
the association, or may contribute only proportionately towards certain expenses. The
developer’s voting rights and representation as a trustee or director may also be
adjusted for a certain duration, such as the development phase. However, each HOA
is different and these types of specific provisions will (and must) be set out in the
constitution or MOI of the HOA. Along with the responsibility to contribute towards
expenses associated with the common area, members have the responsibility to
ensure compliance with the governance documentation of the HOA, and sometimes
MHOA or POA as well, in regard to architectural guidelines, behaviour, maintenance
etc. Sometimes, no member may be a trustee or director, or no general meeting will
be held until the development phase is complete, which may be uncertain, or a certain
number of erven are sold / developed, or a particular period of time has lapsed.
Before signing on the dotted line, and becoming a member of an HOA, make sure that
you have read the governance documentation of the HOA (and MHOA or POA if
relevant) and looked out for certain important requirements or restrictions. Often, there
is a restriction on when an erf may be sold if purchased from the developer, with a
penalty for non-compliance and selling earlier than allowed. Often the erf cannot be
used for a secondary dwelling, subdivided or consolidated, or even multi-level
dwellings may not be allowed due to height restrictions. Furthermore, the size, design,
colour, layout, materials etc. may be regulated for the initial build and any subsequent
improvement, alteration and / or renovation. Penalties may be imposed for any
noncompliance with building commencement or completion times, which penalties
can increase over time exceeding a monthly levy payable by extreme multiples,
which the Courts have allowed under certain circumstances and in compliance with the
Conventional Penalties Act. If a dispute arises due to any of these rules, regulations,
restrictions etc., a member or the HOA has a choice, depending on the wording of its
governance documentation, to pursue arbitration or an application for dispute
resolution at the Community Schemes Ombud Service (CSOS). Unlike sectional title
schemes, if the constitution or MOI provides for arbitration as a method of dispute
resolution, the parties may agree to follow this process.
However, it is not all doom and gloom, rules and regulations in communal living. An
HOA is a community, fostering good neighbourliness, safety and security, common
interests, promoting participation and involvement at family events such a golf day,
carnival, running or cycling race or joining the executive committee or sub-committees,
such as finance, security, legal, landscaping or environmental, social etc. In my
opinion, HOA’s focus more on communal living than sectional title schemes, because
in an HOA there is a clear distinction between what is the responsibility of an owner
and what is a shared responsibility. Whereas, the lines are a bit blurred in bodies
corporate, especially when the parties want it to be. However, I may be biased, living
in a security enclave myself after living in sectional title for over 30 years.
Happy Communal Living!
Author: STC_wsi
No thanks
