Understanding Homeowners Associations (HOAs)

If you are considering buying a property in a housing development, it’s essential to understand what a Homeowners Association (HOA) is and how it operates.

HOAs are legal entities responsible for managing and regulating housing development schemes. Although homeowners own their individual properties, the HOA maintains and oversees communal infrastructure, such as roads, security systems, and other shared amenities.

When purchasing a property in a housing development, the title deed will typically include a condition that mandates automatic membership in the HOA for the new owner. Additionally, the transfer of ownership cannot occur without the HOA’s approval.

During the registration process, you will receive access to the HOA’s Constitution and Conduct Rules. Here is an example of the language you might find in the title deed:

“SUBJECT to the following condition contained in Deed of Transfer Number Txxxx/20xxx, imposed by Stormers Country Estate (Pty) Ltd, Registration Number XXXX/XXXXX/XX, as developers, and as stipulated in the Stormers Country Estate Homeowners Association Constitution, established under Section 29 of the Land Use Planning Ordinance No 15 of 1985, and approved by the City of Cape Town under Section 42 of the same ordinance, regarding the subdivision of Erf XXXX Cape Town:

‘That the within property may not be sold or transferred without the prior written consent of the Stormers Country Estate Homeowners Association, of which the Transferee shall become a member. Such consent shall not be unreasonably withheld.’”

HOAs can be established through two legal structures: as a non-profit company or a common law association.

• Non-Profit Company: An HOA set up as a non-profit company operates under a Memorandum of Incorporation and is governed by the Company Act.
• Common Law Association: An HOA established under common law operates according to its Constitution, guided by Common Law.

In both structures, the HOA’s governing documents serve as binding contracts for homeowners/members within the development. These financial and governance documents must be submitted annually to the Community Schemes Ombud Services (CSOS) for record-keeping and oversight.

The Constitution and Core Duties of HOAs

The Constitution of a common law association outlines the operational obligations and governance structure of the HOA. It allows members or executive members to create regulations and rules that bind all members. The Constitution details the scope of the HOA’s activities and the powers of its executives, which are typically defined during general meetings.

Core Duties:

• Maintenance and Repairs: One of the HOA’s primary responsibilities is the upkeep and repair of communal spaces and shared amenities. This includes tasks such as landscaping, pool maintenance, parking lot upkeep, and the management of recreational facilities. By collecting membership fees, the HOA ensures these areas are well-maintained, enhancing the living experience for all residents.
• Enforcement of Rules and Regulations: HOAs establish and enforce community guidelines, which may cover architectural standards, noise restrictions, pet policies, and parking regulations. These rules are essential for maintaining the community’s appearance and ensuring a high quality of life for all members.
• Financial Management: The HOA board oversees budgeting and financial management, ensuring funds are allocated transparently and effectively.

While HOAs do not have inherent powers to impose penalties on members, their governance documents may grant them the authority to pursue legal action for collecting overdue levies, fines, or other fees owed by members.

A well-managed HOA, with effective oversight by elected executives, can foster a strong sense of community and potentially enhance the market value of individual properties.

Before purchasing a property within a housing development scheme, reviewing the applicable governance documents and familiarising yourself with the rules and regulations you will be expected to follow is crucial.

Reference:

• Home Owners’ Survival Manual by Graham Paddocks

While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither the writers of the articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes.