Sectional title corner – Our homeowners association was never registered so now what?
We have recently bought a full-title home in a complex of six houses (all full-title). The houses are built in three blocks of two houses, with each block sharing a common garage wall and a common roof. There is a common driveway of about 100m and a front wall with a sliding/motorised gate. About 90% of this wall actually is a boundary wall for the two front houses, with just slightly more than the width of the gate actually being common to all the houses.
The original developer never registered the home owners association against the title deeds in the deeds office or anywhere else. Besides me and my wife the other five houses are owned by widows who have been living here for a very long time. They started collecting funds into a home owners association banking account about 15 or so years ago. The R100 per month is used to pay for the repair of the gate, the paint (but not labour) for the roofs and the paint for the exterior walls.
They have held meetings on an irregular basis, not had a chairman, had a sort of a treasurer and alternate signatory to the banking account but THAT’S IT. They have no insurance whatsoever.
Now the bank has asked for certain information for FICA purposes and we came along. I need to know the following:
Do we need to register the association and if so to whom and how do we go about it?
I hear that every residential property has to pay R40 per month to the Ombudsman. Is this so in our case and how, when, why?
My wife and I are of the opinion that we need public liability, fidelity guarantee and building (for the wall and driveway) insurance. Is this correct?
Please advise as we have a meeting on 7 December 2016 and I would be grateful if we could sort out these problems. – Eddie and June
Dear Eddie and June, unfortunately I do not know which city you are staying in, but the various councils have various bylaws on this.
I am not convinced that you are a full-title scheme, seeing that the units share a roof. If you can give me your erf number I can make sure of this.
If it is full-title: You can either register the home owners association (HOA) as a company or you can create a voluntary association with a constitution (this you will need to do through council). One of the reasons for doing so will be to be able to bind future owners to the association; otherwise someone can buy a unit and just refuse to pay the levies.
I would suggest that you speak to an attorney to assist you to set this up.
In terms of the CSOS levy (R40) – it is not for every residential property and is only for units in community schemes; technically as you have not been registered as a HOA you should get away with not having to register at CSOS. Once you become an HOA you will have to register and pay over the CSOS levy.
Only once you have registered as a HOA will you be able to get the public liability cover and fidelity guarantee and with an HOA the insurance of the property is for the owners’ account; it is only the common property that must be insured by the HOA.
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Who is Karien Coetzee?
Karien Coetzee is the national property management consultant at property management company, Trafalgar. She holds qualifications in sectional title schemes management and homeowners association management.