The Formation of Homeowners’ association?
Homeowners’ Association (HOA) may be established as a non-profit company or common law association. A non-profit HOA is registered in terms of the Companies Act 71 of 2008 and a common law HOA is formed when two or more members (known as trustees) decide to form a HOA. These common law HOA operate under their own rules and not that of the Companies Act. Residents volunteer to form part of the community scheme’s board of directors in a non-profit HOA who will essentially form the HOA. Any home owner in a community scheme governed by a HOA is bound by the registration of the title deed conditions. Members of the HOA are required to pay monthly levies to the HOA. These levies will be utilised by the HOA to conduct maintenance and operational duties for the common property.
The Functions of the HOA?
The main functions of the HOA is to enforce a standard or set of rules embodied in a document called the Constitution and also penalise residents for breaching said rules. They hold meetings to ensure the functionality or administration of the community scheme remains operational and optimal. Another responsibility of the HOA is to ensure that maintenance on the common property is upheld and that the finances for the upkeep of said maintenance is arranged through proper budgeting and financial flow. The HOA should also ensure that the common property is insured and oversee the general harmonious living environment by ensuring social activities are held to promote a sense of ‘togetherness’ in the community. This can be done by arranging weekly communial exercise sessions or monthly flea markets.
What to look out for when purchasing a home in an HOA?
It is advisable for individuals looking to purchase property within HOA to consider the rules and policies of such HOA before signing an Offer to Purchase the property. A copy of the HOA Constitution or Memorandum Of Incorporation can easily be requested from the estate agent listing the property or development. Also paying close attention to the monthly levies payable and role of the members in the HOA.
How to hold an HOA accountable?
Since a HOA is known as a community scheme, the HOA are also compelled to comply with the Community Schemes Service Act 9 of 2011. The Community Schemes Ombud Service (CSOS) was established in terms of the Community Schemes Service Act 9 of 2011.The main function of the CSOS is to regulate good governance between parties within community schemes.
Another main function of CSOS is their ability to act as a mediator by making use of alternative dispute resolution to resolve administrative disputes in community schemes. Home owners in a HOA are also charged a levy for the CSOS in addition to their monthly levies and are not aware that such a Ombud service exist.
How to contact CSOS?
The CSOS may be contacted through its regional offices located in Sandton, Cape Town and Durban.