Written for Property Poser
This week the Property Poser experts assist two readers with queries relating to a homeowners’ association (HOA).
The first reader would like to know what percentage of owners should have to vote to change the rules of an HOA. He thinks that it should be about 70% and would like to know whether it would have been legal had this action been taken with the vote of only 10% of the owners.
The second question comes from a reader who did not realise that the development he had bought into formed part of an HOA.
According to Schalk van der Merwe from Rawson Properties Helderberg in Cape Town, an HOA can be an imposed restriction on a developer intending to develop land.
“It’s often found when a development is built on a piece of land with a shared, privately-owned open space for amenities.”
Van der Merwe says 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 administration and ownership of such common facilities vests in the HOA.”
The association’s constitution typically sets out the guidelines for the management, operation and maintenance of the common property, says Van der Merwe.
“This usually includes landscaping, recreational facilities, private streets and driveways, outdoor lighting, communal structures and fences.”
Van der Merwe says the document will typically include the manner in which any part of the constitution may be amended, usually at a special general meeting or the annual general meeting.
“Not having seen the constitution in question, we can only guess what the required number of votes would be to change the rules in this instance. But it’s most unlikely that it will be as low as 10%.”
Van der Merwe says the reader should be able to access a copy of the constitution to check the requirements.
“The voting thresholds should be clearly set out and he could quickly determine whether the ostensible amendments were legally executed.”
Regarding the second reader’s situation, there are a number of legal issues and questions arising, says Sean Radue of Radue Attorneys in Port Elizabeth.
“We aren’t advised whether the HOA requirement was disclosed to our reader or whether he took any steps to check, such as perusing the title deed.”
Radue says a clause usually found in a contract of sale is that the purchaser has looked at the title deed and is aware of any restrictions contained therein.
“One should remember that there’s usually a duty on the purchaser to make some enquiries of his own.”
Radue says the panel is not told whether the reader would still have bought the property, had he been aware of this requirement.
“The restriction could be regarded as a defect of sorts.”
It is possible that a misrepresentation of this fact could have resulted in the buyer proceeding with the purchase when he may not have done so had he known about the existence of an HOA, says Radue.
“He may thus claim for the setting aside of the agreement based on this fact.”
On the other hand, he may have possibly wished to continue with the sale, but at a lower price, considering the potentially restrictive nature of an HOA, says Radue.
“In such an instance, he may have a claim for the reduction of the purchase price.”
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