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Wednesday Sep 02, 2015

Tenants 'accept HOA rules' when signing lease

When a party such as a landlord, body corporate, supervisor or a letting agent disconnects or restricts access to water and electricity, the tenant or occupier can bring an urgent court application.

This common remedy, an interdict, is based on the mandament van spolie or an order of court to undo the spoliation or unlawful act.

If the magistrate or judge is satisfied that the action was unlawful, an interim order is granted. Parties are given a return date to appear in court to have the order confirmed and therefore make a final order.

The respondent (eg, a landlord) can challenge the order to have it discharged.

The respondent as the party that caused the alleged unlawful act has the opportunity to present evidence that there was no unlawful action. An example is proof that the services were disconnected by the municipality because the tenant tampered with the water or electricity meter.

In most instances, the court would confirm the interim order because no one is allowed to break the law and no one may resort to self-help tactics.

What would be the court's response to a situation where an owner has agreed to have services restricted for failing to pay levies to the homeowners' association (HOA)?

This agreement is then included in a lease contract with the tenant, binding the tenant to the same consequence for the owner's levy arrears? On the face of it, the tenant will be granted a spoliation order if the services are restricted. What would happen if the HOA challenges the interim order on the basis that it has the legal right to restrict or deny these services?

HOA have multiple owners, but each owner has full title registered with the deeds office for a conventional property.

Each owner is a member of the association, which may be a section 21 company or established in terms of a municipal ordinance.

In the case of Van Rooyen v Hillandale Homeowners Association [2015] JOL 33597 (FB), the rules of the association that allowed it to restrict water and electricity, were found to be lawful and binding on the owner and the tenant.

Van Rooyen entered into a lease agreement with Sue Celken Family Trust (the Trust) in November 2012, taking occupation of a property at 15 Wildehond Street, Woodland Hills Wildlife Estate, Bloemfontein. The Hillandale Homeowners Association (HHA), a non-profit company, was responsible to govern, administer and manage the estate by promoting, advancing and protecting the communal interests of its members.

The Trust failed to pay certain penalties/levies charged for its failure to adhere to aesthetic rules. This affected Van Rooyen's water and electricity because he was restricted to the number of units he could purchase from the HHA for the prepaid water and electricity vouchers.

Eventually, he had no access to the HHA's internet site to purchase the vouchers.

On April 8, 2014, Van Rooyen obtained an urgent interim court order against the HHA to restore, without delay, access to its internet site to be able to purchase prepaid water and electricity.

On the return date, Van Rooyen wanted the court to confirm the interim order, but the respondent, the HHA, challenged it to have it discharged.

The HHA argued that it was within its legal rights to restrict the services to the Trust's property in terms of rule 13.11 of the Manual for Community Participation. This rule provides that the HHA can refuse the provision of electricity to any occupier or owner of any erf in respect of which levy payments are outstanding for a period of 60 days or longer, until such time as all outstanding levy payments are paid in full.

In terms of its Memorandum and Articles of Association, every member (owner) is bound by the rules or regulations. No member/owner "shall let or part with the occupation of his residence, whether temporarily or otherwise, unless the proposed occupier has agreed to be bound by all the provisions of the rules. Such an occupier shall at all times be bound by the rules".

The HHA had the right to enforce the rules by imposing penalties.

The court discharged the interim order. It held that the Trust as owner failed to adhere to the aesthetic rules and subsequently failed to pay the penalties. The rules were binding on the owner and the lease contract bound the tenant to the rules as well. Accordingly, the HHA acted lawfully since it was entitled to refuse to sell the tenant prepaid water and electricity vouchers, or to limit the number of units.

There was nothing unlawful or immoral about the rules and it was not against public policy. The court was therefore bound to respect the freedom of parties to contract as they please.

The tenant had the option not to sign the lease, but once he accepted the lease with the rules of the HHA, he, like the owner, was bound by it.

Dr Sayed Iqbal Mohamed
Chairman, Organisation of Civic Rights
Tenant Issues
Daily News

 
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