Gauteng Business News

Send  Share  RSS  Twitter  01 Apr 2010

PROPERTY: New Law No Threat to Home Owners Association Rules


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Even when it becomes law in October, the new Consumer Protection Act will not give homeowners in residential estates unlimited rights to do as they please without regard to the management and conduct rules of their homeowners’ associations (HOAs).

So says Jeff Gilmour, president of the Association of Residential Communities (ARC), in response to recent reports that HOAs will be infringing the consumer’s “right to choose”, entrenched by the new legislation, if it accredits only certain suppliers and service providers to work on their estates – and that residents of the estates will thus be justified in challenging or ignoring such accreditations.

“Following this line of reasoning, it would then also be true to say that the HOA is interfering with the homeowner’s ‘right to choose’ when it sets down architectural guidelines for the estate, or makes rules about parking and pets, or even when it requires residents to pay their levies.

“And clearly this is ridiculous. There would soon be chaos in an estate – and an ensuing decline in property values, security and lifestyle - if everyone just ignored the HOA rules and did their own thing. It’s the existence and effect of certain rules that make estates desirable in the first place.”

Gilmour points out that even in traditional suburbs, homeowners have to follow local authority regulations and by-laws that restrict the type and height of buildings that may be constructed, for example, or provide for noise limitation, or, for that matter, control the display of estate agents’ advertising boards.

“The point is that these by-laws are not ill-intentioned attempts to curtail people’s freedom, but rules made for the common good of the community of residents who have chosen to live in that area – as are those put in place by any well-run HOA for the residents of a particular estate.

“In this regard, it is also important to note that HOAs are not voluntary or informal bodies run by a handful of owners having fun and making up rules as they go along. Most HOAs are registered Section 21 companies of which every homeowner in that particular estate is automatically a member, and thus has a very clear say in what rules are made and how the estate is run.

“The only volunteerism taking place is usually on the part of those elected by their fellow homeowners in the estate to be directors of the HOA, who often do the job on a voluntary basis despite the heavy management and fiduciary responsibilities involved.”

Consequently, he says, those who are suggesting that HOA rules will simply be superseded by the Consumer Protection Act should perhaps consider a 1997 Supreme Court decision that makes it clear that while it is everybody’s “right to choose” not to buy into a complex governed by certain management or conduct rules, those who do buy there are effectively agreeing to live by those rules, even if this means giving up some of their common law rights.

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