A reader has asked the experts for a comparison between property ownership where the provisions of the legislation relating to sectional titles are applicable and where those of a homeowners’ association (HOA) apply.
See the reader’s question here.
An HOA is typically found in so-called cluster housing.
This is when a development is done on a piece of land with a shared, privately owned open space for amenities. Each owner obtains a separate title deed for his or her piece of land and there is a joint right of use of the infrastructure and common facilities.
The ownership of such facilities vests in the HOA.
Often, the HOA is operated in the form of a non-profit company and an elected executive committee is responsible for its day-to-day running.
The general meeting of owners elects the members to that committee and makes decisions by means of resolutions taken at general meetings.
The association’s constitution sets out the guidelines for the management, operation and maintenance of the common property. This usually includes landscaping, recreation facilities, private streets and driveways, outdoor lighting, and communal structures and fences.
This constitution will also set out the way in which any part thereof may be amended, usually at a special general meeting or at the annual general meeting.
The concept ‘sectional title‘ on the other hand describes the separate ownership of units or sections within a complex or development.
When you buy into a sectional title complex, you purchase a section or sections together with an undivided share of the common property, which is known as a unit.
A sectional title unit may refer to anything from a semi-detached house to a townhouse, flat, apartment or duet house.
What is clear from both forms of ownership is that there will be some form of co-management of parts of the property, typically in the form of “common areas”.
This means that joint decisions need to be made from time to time.
Furthermore, especially in a sectional title complex, restrictions may be in place regarding the outside appearance of your property and potential owners need to ensure that they will be able to abide by such rules.
The administration of a sectional title complex is highly regulated and the applicable law is well developed and extensive.
An HOA operating as a company will function under the applicable company and other laws.
The payment of levies is also often contentious in both forms of ownership.
Once a decision has been made by the relevant committee or body corporate, all owners will be bound by it.
However, sufficient allowance is made for electing the body in charge of the property and general meetings where decisions are made and so forth.
It is simply up to owners to participate in the decision-making process as much as they can to ensure that their interests are properly represented.
Both systems, as with most things, are subject to potential abuse. It is thus necessary for suitable people to bear office and for appropriate checks and balances to be implemented.
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