South Africa’s property sector consists of parties who enjoy certain rights under the country’s constitution. Part of this healthy mix of industry participants are homeowners who have invested in different types of properties. The interests of these property owners are safeguarded by a legally constituted body called a Homeowners' Association (HOA).
Here’s what you need to know about being part of a Homeowners' Association (HOA) when buying into a complex or estate in South Africa.
What constitutes a Homeowners' Association (HOA)?
Homeowners' Associations (HOA) are formed by property owners in full title or freehold housing establishments such as apartments, houses, parks, roads, common areas, etc.
What is the mandate of a HOA?
The key mandate of a Homeowners' Association is to enforce a set of rules, procedures and policies which are agreed upon through a Homeowners' Association constitution or commonly known as a Memorandum of Incorporation. The financial obligations of Homeowners' Associations which include security for the property, waste management, insurance premiums, common rates and taxes, administrative costs are catered for through the monthly levies paid by members. Leaders of Homeowners' Associations are called trustees or directors and they are elected during the Annual General Meeting attended by members of the association.
How is a Homeowners' Association formed?
It goes without saying that a Homeowners' Association (HOA) can’t exist in a vacuum. HOAs are formed out of a need to properly manage property. The first step in the formation of an HOA is therefore the construction of property and possible subdivision into individually owned separate lots.
An HOA can be established as a non-profit company or as a common law association. A non-profit HOA operates under the Companies Act which stipulates how this body will operate and how Directors and Executives will be appointed. Common law associations have a flexible structure and are bound by their own rules rather than the Companies Act. Common law associations are led by trustees and not directors. When it comes to registration, a non-profit HOA is registered like a non-profit company while a common law HOA is formed when two or three members agree to the formation of the association. Members in HOAs are bound by the registration of title deed conditions.
Why should you consider being a part of a Homeowners' Association leadership?
Being a part of an HOA comes with some benefits. Some of the benefits earned by being an active member or leader of an HOA include: