Author: Matthew Davidse
Prior to buying a vacant erf/plot in an Estate governed by a Homeowners Association (“HOA”) it is imperative that you familiarize yourself with the rules contained in the HOA’s Memorandum of Incorporation or Constitution.
Many HOA’s have building clauses which stipulate that building work must commence within a set time period from date of transfer to a new member. The building clause could further prescribe that if building work has commenced that same is completed within a set period thereafter (for example, that once a member begins construction that same is completed within a year).
If you buy a plot within an HOA, you automatically become a member of the HOA and have a contractual obligation to comply with the rules and regulations which govern the HOA.
Building penalties may stem from either a member’s failure to commence building work in time or their failure to complete building work within the set timeframe. Dependent on the governance documentation of the HOA, a building penalty could be levied as a ‘once-off’ fine, could be recurring (a ‘penalty levy’), or even increase until such time that the member complies with the relevant provision.
While a building penalty cannot be imposed indefinitely and the imposition of penalties would differ from HOA to HOA, any fine must remain equitable under the circumstances, procedurally fair and be deemed proportionate in relation to the harm suffered by the HOA with regard to non-compliance by the member.
Many HOA’s further prescribe ‘Aesthetic Guidelines’ which each house must be compliant with in the interests of ensuring that a homogenous architectural style is maintained within the HOA. In addition, certain HOA’s may even have landscaping guidelines. These guidelines are most often included in the governance/founding documentation of the HOA, and must be complied with by all members. The guidelines may include requirements surrounding paint colours, specifications of door/window frames, blind/curtain styles or even which light fittings or flowers are acceptable. Penalties for non-compliance with the aforementioned guidelines are also commonplace, so buyers should ask themselves whether they’d be willing and able to comply with them prior to even offering to purchase the erf in question. A buyer should ask whether whether the building provisions – and the corresponding timelines – have already been applied to the sellers and whether same will be transferred as-is, or whether the buyer would be granted an extension to comply with the building timelines once they become a new member. If there is uncertainty in this regard, contact our team prior to signing an offer to purchase.