Dear Troubled Trio
This is all to do with the new Companies Act and really should be handled by an attorney who has experience with that Act.
I would however suggest that if each owner is a shareholder, then the ratification of any changes should be used to limit the privileges of the directors of the company.
Again it shows that people are buying into complexes – in this case an HOA – without understanding what they are buying.
It is similar to the problem of sectional title schemes where people who have not owned property before do not understand that there are rules and levies in sectional title schemes.
My question is whether it is the responsibility of the seller to explain every little point of an HOA or sectional title scheme or whether the buyer should take basic steps to find out how the building is owned and how they are governed.
It is possible to have a sectional title scheme within an HOA. Owners are then governed by both sets of rules.
Having said that I agree that the rules of many HOAs are draconian.
They are frequently very biased to the original developer who has preferential treatment until all the units have been transferred away from the developer (which almost never happens).
Hopefully the new Act will help to get better and fairer management.
One of the major problems is the reality that in many schemes the rules are written in such a way that owners have very little say in the real running of their scheme and are stuck with the management that the developer wants.
Read the reader’s question here.