The Home Owners Association of a scheme or development have the power to stop the sale of a unit if the homeowner has not complied with the scheme rules.
Don't assume that the problems you are having with your Home Owners Association (HOA) will automatically be resolved when you sell the property. In fact, if you don't resolve ongoing issues you may get way more than you bargained for, but not necessary in the financial sense, particularly if you are behind with levy payments or have built an extension without the necessary permission.
Jason Shaw, National Sales Executive Pam Golding Properties says homeowners are usually bound by the rules of the scheme or development, which are typically incorporated into the sale agreement and/or the title deeds. These rules are generally set up to protect the investments of all homeowners, and to ensure that all homeowners comply with the aesthetics and architectural guidelines of the scheme.
In other words, the rules are there to ensure that the development continues to look uniform. This is important because although some homeowners will comply and stick to the rules, others will attempt to flout the rules and change the appearance of their unit. To give an example, let's say a particular estate features Cape Dutch houses with white walls and thatched roofs. Joe Soap comes along and decides he doesn't like the look and repaints his home blue. The home won't only stick out like a sore thumb, it's going to affect the overall look of the estate, which could impact on the value of other properties.
Of course, there are HOAs and there are HOAs and there have been instances when things have gotten out of hand with the head of the association trying to incorporate his own interpretation of the rules into the equation. While this makes things difficult, it doesn't mean that aggrieved homeowners automatically have to comply – they can take the matter further and lodge a grievance with the relevant authority.
Shaw notes that up until recently, these problems would have had to be resolved via the courts, a very lengthy, costly option. The recently established Community Schemes Ombud Service (CSOS) www.csos.org.za, provides a dispute resolution service as well as information on legislation governing community schemes, including sectional title complexes, homeowners' associations, flats, golfing estates, retirement homes, and any other properties where there is a management agency or body corporate involved in management of the properties.
Dina Porteous, director Property Management Ignite, agrees saying that the new government initiative won't only make the mediation process easier, it will save the homeowner time and money. “This particular legislation was sorely needed in this country and will help countless people resolve community living issues for free. The Community Scheme Ombud Service (CSOS) offers alternative, impartial dispute resolutions in terms of the new Community Scheme Ombud Services Act,2011. This Act regulates the conduct of parties within community schemes and ensures good governance without the need to turn to the courts to resolve issues.”
It stands to reason that some disputes will ultimately head to court, particularly if a homeowner has lost money due to a collapsed sale. Alan Levy, from Alan Levy Attorneys says that one of the more common reasons for stopping a sale is due to outstanding levies.
An HOA can stop a sale where there are unpaid contributions by the owner to the HOA and where the HOA has not issued a clearance certificate in respect of outstanding contributions by the owner for the transfer.
There are, however, other circumstances whereby a HOA may attempt to stop a sale.
“If the HOA wishes to stop a sale in other circumstances, these circumstances would have to be binding upon the owner by way of inclusion in the owner’s title deed for the property or in the Memorandum of Incorporation or other governance documentation of the HOA,” he says.
He adds that it is important to remember that an owner could sue the HOA if he believed the HOA had acted negligently and the homeowner had suffered damages as a result.
Estate living isn't for everyone and it is vital to ascertain if the rules of a particular estate suit the needs and wants of a seller before a purchase.
Shaw says that anyone investing in this type of property should study the rules and regulations governing the scheme to ensure they are happy to live under the rules before buying a property.