Understanding Homeowners Associations in South Africa: Everything You Need to Know
Owning a property in South Africa comes with many responsibilities, including maintaining and protecting the property, paying taxes and complying with local regulations. For homeowners living in communities with shared properties or amenities, these responsibilities can become even more complicated. That's where Homeowners Associations (HOAs) come in. In this blog post, we'll discuss everything you need to know about HOAs in South Africa, their purpose, functions, and benefits and how they can affect your property ownership..
What is a Home Owners Association?
A homeowners’ association, which is commonly referred to by its acronym “HOA”, is a legal body which is created to govern communal living estates where the individual properties are owned outright by their owners (as a freehold title), while the common communal facilities and infrastructure (collectively referred to as “common property”) are owned by the HOA. Common Property often includes, but is not limited to, security entrances, club houses, parks, roads, pavements, bulk services infrastructure (e.g. water and electricity) and boundary walls.
A Homeowners Association is a non-profit organization and are responsible for managing and maintaining common areas, such as parks, pools, roads, sidewalks and enforcing rules and regulations that govern the use of these areas. HOAs can also provide other services to members, such as security, garbage collection and landscaping.
The Purpose of Homeowners Associations (HOAs)
The primary purpose of HOAs is to ensure that a community's shared spaces and amenities are well-maintained and preserved for the benefit of all members. HOAs are also responsible for enforcing rules and regulations that help to maintain the community's appearance, safety and property values. By doing so, HOAs can help to create a sense of community and pride among residents and protect property owners' investments.
How to Form a HOA?
An HOA can be established either as a voluntary association or as a non-profit company.
Non-profit Company
A non-profit company or non-profit HOA is established in terms of the Companies Act and its founding document is a memorandum of incorporation.
A non-profit HOA is registered like a non-profit company with CIPC.
Voluntary Association
A voluntary association (which is also known as a common law association) is established in terms of the common law and its founding document is a constitution.
Voluntary associations have a flexible structure and are bound by their own rules or constitution rather than the Companies Act. Common law associations are led by trustees and not directors. A common law HOA is formed when two or three members agree to the formation of the association.
HOA Legislation
Unlike sectional title schemes, there is no legislation that specifically governs the operation of HOA and consequently, HOA are governed by their founding document which typically, inter alia, detail the purpose of the HOA, regulate the rights and responsibilities of the HOA, the executives and the members.
Functions of Homeowners Associations (HOAs)
HOAs perform several essential functions, including:
Managing common areas and amenities: HOAs are responsible for maintaining and managing shared spaces, such as pools, playgrounds, and parks, and ensuring that they are safe, clean, and in good condition.
Enforcing rules and regulations: HOAs have the authority to enforce rules and regulations governing the use of common areas and individual properties. This can include restrictions on parking, noise, landscaping, and architectural features, among others.
Collecting fees and assessments: HOAs can collect fees and assessments from members to cover the costs of managing and maintaining common areas and amenities, as well as providing other services.
Resolving disputes: HOAs can act as mediators or arbitrators in disputes between members, or between members and the HOA itself.
HOA Membership
Each home owner must be a member of the HOA as this ensures that they are contractually bound by the HOA founding document and any rules promulgated in terms thereof.
It is often a condition of any sale agreement in respect of a property within the estate that the new home owner is bound by the HOA founding document, and sometimes this requirement is also a condition that is stated in the title deed of the property. These rules are set up to protect the investments of all homeowners and to ensure that they comply with the aesthetics and architectural guidelines applicable to such residential estate.
The SCA has affirmed the right of HOA to make rules regulating particular kinds of conduct in private estates. The SCA ruled that gated estates are entitled to draw up traffic rules for their internal roads and to regulate access – and to impose fines for breaking these rules (this affirms that roads within private estates are not public roads).
As a result, when buying into an estate it is critical that you have received a copy of the HOA founding document and any rules promulgated in terms thereof before you purchase the property!
Benefits of Homeowners Associations (HOAs)
HOAs offer several benefits to members, including:
Maintenance and protection of shared spaces and amenities: HOAs ensure that common areas and amenities are well-maintained and protected, which can enhance residents' quality of life and property values.
Enforcing rules and regulations: HOAs can help to maintain a community's appearance, safety, and property values by enforcing rules and regulations that govern the use of common areas and individual properties.
Community building: HOAs can promote a sense of community and shared responsibility among members, which can foster social connections and support.
Conflict resolution: HOAs can help to resolve disputes among members, which can reduce tensions and promote harmony within the community.
What is a Home Owners Association Dispute?
A HOA dispute is where a dispute arises between owners, tenants, trustees, neighbours, home owners association and/or third parties which relate to the communal living estate (e.g. dispute relating to outstanding levies, nuisance, abuse of the common area, unsafe construction or building operations, etc.).
Most HOA disputes can be easily resolve through effective communication between all stakeholders. Trustees and managing agents should try to resolve these disputes as soon as possible. However, trustees should be careful not to overstep their mandate when attempting to settle disputes.
Conclusion
Homeowners Associations (HOAs) play a vital role in managing and maintaining shared spaces and amenities in South African communities. By enforcing rules and regulations and collecting fees and assessments, HOAs can help to enhance property values and create a sense of community among residents. However, HOAs can also have significant impacts on property ownership, particularly in terms of costs, rules and regulations, decision-making and disputes. If you're interested in creating a HOA, developing governing documents to ensure that your HOA is legally recognized and effective, our property law attorneys are highly skilled, experienced and acquainted with these type of matters and disputes.
If you need assistance with a property matter, contact our offices today to schedule a consultation with one of our specialist property law attorneys. Alternatively, you can schedule a consultation online by using the following link Book An Online Consultation.
