Home Owners Associations in South Africa: A General Overview

Introduction

In establishing a township consisting of freehold erven which are individually owned, a developer is guided by and obliged to follow the Conditions of Establishment which are prescribed by the relevant local authority, within whose area the proposed township is located.

The local authority will, in the case of a private or gated township, impose a condition that the developer is to establish a Home Owners Association (HOA) to, inter alia, take over certain services and ownership of certain erven in the township at a future date.

Types of HOAs

There are two types of legal structures which give rise to the establishment of HOAs.

The first is a common law association which is governed by governance documentation under a written constitution prepared by the developer. Many of the earlier townships were governed by this structure.

The second structure is a non-profit company (NPC), whose primary governance documentation is its Memorandum of Incorporation (MOI). The Companies Act 71 of 2008 regulates the operation of NPCs. Under this structure, the HOA is run by a board of directors appointed by all the registered owners in the development.

Who belongs to and what is governed by an HOA

All registered owners of freehold properties are members of the HOA and remain so until ownership passes to a new registered owner. The obligation to become and remain a member of the HOA is a condition of title contained in each freehold title deed.

The HOA takes ownership of all communal properties, such as roads, parks, security areas, boundary walls, clubhouses, and can include sewer and water plants, as well as bulk service areas specified in the Conditions of Establishment.

Who pays for the upkeep and services

All owners, by way of monthly levy charges, are required to pay for the upkeep, replacement and improvement of the services run by the HOA. Owners are legally liable to make their contributions and are to abide by all the rules applicable to the estate.

Governance documentation

For an HOA to function as required, the governance documentation is of utmost importance, as the daily running of the HOA is dependent on the correct implementation thereof.

Governance documentation is, first and foremost, a contract that binds every registered owner of an erf in the township. Read, stay in the loop and follow the HOA's governing documentation.

The governance documentation differs from HOA to HOA, but often makes provision for the directors or executives to make regulations or rules that govern guidelines affecting, inter alia, architecture, environmental or management and conduct issues within the development, which eventually become binding on the members. For this reason, it is important for members to attend all HOA meetings. Rules and guidelines cannot contravene or contradict any term in the Constitution or MOI.

Community Schemes Ombud Service (CSOS)

HOAs are not governed by the Sectional Titles Schemes Management Act and its Regulations, but by the CSOS Act 9 of 2011 and its Regulations. It is important to note that all HOAs must be registered with the CSOS and all the governing documentation of the HOA is to be lodged with the CSOS for approval and acceptance.

In closing: A short summary

The key responsibilities of an HOA are:

• Upkeep of communal property

• Levy collection

• Implementation of rules

• Issuing of clearance certificates

Ownership and membership

Every title holder is a member of the HOA.

The HOA owns all the common property in the township, including roads, parks and amenity erven.

Meetings and compliance

All meetings are to comply with the governance documents, together with relevant Acts of Parliament and the Regulations published thereunder.

Members are to comply with the governance documents.

Members are to be aware of the contents and requirements of the governance documents.

HOAs are to comply with SARS requirements.

HOAs are required to comply with the Companies and CSOS Acts.

Disputes

The primary function of the CSOS, which came into operation under the CSOS Act, is to provide a relatively inexpensive and efficient system to resolve administrative disputes that arise in HOAs, but this does not exclude aggrieved members from referring disputes to the South African courts of law.

Court rulings

In the recent past, the courts have passed judgments regarding issues which, inter alia, related to short-term rentals within the areas of jurisdiction of HOAs, which rulings have a direct impact on how conduct rules passed by HOAs are dealt with, even though such rules have already been scrutinised by the CSOS.

Johan Jacobs

BProc

Consultant at Le Roux Vivier Attorneys

Disclaimer: The views expressed in this article are those of the author(s) and do not necessarily reflect the views of the firm. This content is provided for general information only and does not constitute legal advice. While every effort is made to ensure accuracy, the law may change and its application depends on the specific facts of each matter. Readers should seek professional legal advice before acting on any information contained herein. The firm and the author(s) accept no liability for any loss or damage arising from reliance on this content.