Homeowner association rules must be checked before purchase

10 March 2015

With security estates increasingly becoming sought after places in which to live, particularly in the South African context where people want the “safe” environment estates offer, it is important that purchasers be made aware of certain points before they decide on a particular estate, says Lanice Steward, managing director of Knight Frank Residential SA.

All too frequently the reality is that a buyer will not read the conduct or the management rules of the scheme before they sign an offer to purchase and agents must ensure that their buyers do so.

When buyers sign a purchase agreement, they would usually go through the financials of the scheme and the rules should also be attached to the same agreement, so that they can go through these as well, said Steward.

“It is imperative that buyers check whether the rules could possibly have punitive conditions which could impact negatively on the enjoyment of living there as well as general rights to comforts within the scheme,” she said.

Some of these rules relate to building codes and architectural guidelines but some of these also relate to services within the estate, fines that can be imposed for misconduct or breach of the rules or non-payment of levies.

The HOA rules should, if the home is to be rented out on a long or short term let, be given to the tenant to read and to sign before they move in, said Steward.

A case summarised in a Smith Tabata Buchanan Boyes property law update illustrates just how onerous some estate rules can be, and if the home has been bought there, then the owner and tenants are bound by these, warned Steward.

In this particular case - Van Rooyen v Hillandale Homeowners Association – the HOA fined the owner for his breach of the aesthetic guidelines and because the HOA rules allowed for this, the owner and tenant could not buy electricity and water vouchers for the prepaid meters until the breach was remedied. The rules also made provision for dealing with unpaid levies in the same way, in that no electricity or water top-ups could be bought unless the levies were up to date.

The courts held in favour of the HOA, because the rules expressly provided that no electricity or water could be sold to any occupier (whether owner or tenant) if levy payments were overdue or if there were any fines outstanding due to a breach of the rules.

The owners of properties in the estate bound themselves to these rules as these are part of the title deed and tenants are obliged to follow the same rules as owners in the estate. While these were put in place to protect the interests of all the owners in the estate, they can become or be seen to be an infringement on the basic rights to an enjoyment of a property, said Steward.

“This is an important lesson in being sure that one can abide by all the rules if buying into an estate run by an HOA or body corporate, as these are not likely to change and challenging them later can be an expensive exercise,” she said.