Homeowners’ Associations: What you need to know
With the high crime rate in South Africa, security has become a big determining factor when it comes to the decision to buy a home. For this reason home buyers are more frequently leaning towards purchasing homes that are within gated communities. Here, however you may be required to join a Homeowners’ Association (HOA). Moneybags journalist, Danielle Van Wyk, takes a look at HOA’s and what you need to know.
What is a Homeowners’ Association?
“Unlike a body corporate which manages a sectional title development, in a Homeowners’ Association, each member owns the house and the erf or plot on which the home is situated. Usually established by the residents within a community, an HOA is formed to ensure that the infrastructure of an area is maintained. Another major role of an HOA is ensuring the safety of those who live within the community,” says Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa.
According to Goslett, the rules and regulations laid out by an HOA can address numerous aspects such as the colour that a homeowner is allowed to paint their home or whether pets are allowed on the premises. “The stipulations can be restrictive, which is why those who want to buy a home within a community that is governed by an HOA should ensure that the regulations don’t conflict with their lifestyle.”
It is important, however, to delve into the details of the rules and regulations, before you commit. Goslett further offers insight into aspects you should consider:
Are members required to pay a fee?
It is not uncommon for members of an HOA to pay a monthly premium or levy towards the association.
It’s important to go the extra mile and compare how the monthly fees match up against other similar developments in the surrounding suburbs.
“While doing their homework on the HOA, buyers should get the history of how much and how often the rates have increased over the last ten year period. Looking at the past will provide a window into what to expect in the future. Another important aspect to enquire about is whether any additional fees have been charged to homeowners when the HOA lacks the reserves to cover a big project,” Goslett highlights.
What are the estate’s priorities?
To gain insight into the community, you may want to read the minutes of the last few HOA Annual General Meetings. “This will give potential homeowners a clear idea of the community’s priorities and what issues and topics keep rearing their heads,” Goslett states.
Make sure you note the fine print
“Don’t neglect any aspect of the document and read through all regulations, restrictions and conditions before committing to buying the home. It will take some time to read the documentation in its entirety, but it is better to do it beforehand than move in and find out that you are unable to park a second car outside the property or store a caravan in the garden. Rather know up front, than be caught unaware with little recourse,” advises Goslett.
Are there penalties for not adhering to the rules?
It is important to know what the consequences are if the rules are broken or not adhered to. It is essential for buyers to be aware of the penalties for non-compliance.
“Before purchasing any property, governed by an HOA or not, it is vital that the buyer understands all aspects of the purchase and knows what they are getting themselves into. Having a clear idea of the regulations and rules an HOA has in place will provide some insight when choosing to buy a home to in a particular estate,” concludes Goslett.
According to the Institute of Estate Agents of South Africa (IEASA) the new Consumer Protection Act will not give homeowners in residential estates unlimited rights to do as they please without regard to the management and conduct rules of their HOA’s.
“It is also important to note that HOAs are not voluntary or informal bodies run by a handful of owners having fun and making up rules as they go along. Most HOAs are registered Section 21 companies of which every homeowner in that particular estate is automatically a member, and thus has a very clear say in what rules are made and how the estate is run,” adds Jeff Gilmour, president of the Association of Residential Communities (ARC).