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Monday May 04, 2015

'Check homeowner association rules'

"All too frequently buyers don't read the conduct or management rules of the scheme before they sign an offer to purchase and agents must ensure that their buyers do so," says Lanice Steward of Knight Frank Residential SA.

"When buyers sign a purchase agreement, they would usually go through the financials of the scheme and the rules should also be attached to the same agreement, so that they can go through these as well. It is imperative that buyers check whether the rules could possibly have punitive conditions that could impact negatively on the enjoyment of living there as well as general rights to comforts in the scheme."

Some of these rules relate to building codes and architectural guidelines but some also relate to services in the estate, fines that can be imposed for misconduct or breach of the rules or non-payment of levies.

If the home is to be rented out on a long or short-term let, the homeowners' association (HOA) rules should be given to tenants to read and to sign before they move in, says Steward.

A case summarised in a Smith Tabata Buchanan Boyes property law update illustrates just how onerous some estate rules can be, and if the home has been bought there, then the owner and tenants are bound by these.

In this particular case - Van Rooyen v Hillandale Homeowners Association - the HOA fined the owner for his breach of the aesthetic guidelines and because the HOA rules allowed for this, the owner and tenant could not buy electricity and water vouchers for the prepaid meters until the breach was remedied.

The rules also made provision for dealing with unpaid levies in the same way, in that no electricity or water top-ups could be bought unless the levies were up to date.

The courts held in favour of the HOA, because the rules expressly provided that no electricity or water could be sold to any occupier (whether owner or tenant) if levy payments were overdue or if there were any fines outstanding due to a breach of the rules.

The owners of properties in the estate bound themselves to these rules as these are part of the title deed and tenants are obliged to follow the same rules as owners in the estate.

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