Estates: ask questions before signing a sale agreement

Private Property South Africa
Tahir Desai

While living in a gated community or private estate is very attractive to many because of the secure lifestyle and added benefits of amenities the estate might offer, there are some things that need to be checked before buying, as it is likely to be run by an Homeowners’ Association (HOA), which will have its own set of rules and regulations, says Mandi Hanekom, operations manager for the sectional title finance company, Propell.

HOA’s are sometimes confused with bodies corporate of sectional title schemes, but they do have differences, said Hanekom.

“If you’re considering buying a home in a gated estate, there are important questions to ask beforehand. It is best to do this upfront as you do not want to have the nasty surprise of discovering later that what you thought would be a perfect option for you no longer is because of one of the rules that was overlooked,” she said.

Ask for a copy of the rules and regulations of the estate. This will include things such as the colour schemes allowed or styles of the exteriors of the homes, whether pets are allowed and where they are allowed on the common grounds of the estate. The rules will also stipulate whether the owners are allowed to run businesses from their home or whether they are allowed to sub-let rooms to earn an extra income.

As with bodies corporate, the financial standing is very important, said Hanekom. Check whether it is in a healthy state and whether there is a contingency fund available for large projects. At this point it is also advisable to check what the current levies are and when they were last increased.

“Also ask what your levies will cover,” said Hanekom.

The levies should cover the security on the estate, road and common area maintenance, fence upkeep, and servicing of amenities such as a gymnasium, swimming pool or clubhouse.

Most estates will have some levies in arrears, the thing to check here is the percentage of non-payers to payers. Ask what the HOA’s levy collection policy is and whether there is likely to be a problem with its cash flow because of the outstanding amounts, said Hanekom.

There should be minutes of the trustee meetings and these should be made available to anyone who asks to see them. Reading through these will help the buyer get an idea of the issues that have arisen and how they have been dealt with.

If the plan is to buy a plot and build later, be sure to check whether there are penalties for not building within the HOA’s specified time frame as these can be very high. There have cases where the penalties charged amounted to eight or more times the monthly levy.

“Many estates offer high security and a quality lifestyle, and being in a gated community often provides peace of mind if you have a family with young children because they can move around quite freely without the risk of being harmed. If the safe communal setting is what you are looking for, this is ideal, but get all the necessary information upfront and investigate all the options available before buying,” said Hanekom.

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