Uncertainty prevails as to when the consent from the Home Owners Association (HOA) must be lodged where a condition in favour of the HOA is being created in the power of attorney to pass transfer. It is a given fact that where the condition is created in the power of attorney, such condition is only operative as from registration. But how does this affect the requiring of the consent from the HOA on the transfer of the land where the condition is created?
When townships are established or small-scale sub-divisions approved, it is often a condition of the local authority that each owner become a member of the HOA and that the erven may not be transferred/alienated without the consent of the HOA. The question which now begs to be answered is whether the township owner/developer/owner of the parent property automatically becomes a member of the HOA, or are only subsequent owners bound by the restrictions imposed?
Should the developer not automatically become a member of the HOA, it will have the effect that, should a small-scale subdivision be approved and the developer sell only one erf, the owner of such erf will be a member of the HOA on his/her own, should the developer not sell the other erven but merely elect to lease such stands. This would lead to absurdity and could never have been the intention of the legislature.
However, the manner in which the conditions are couched will be indicative of whether the Registrar of deeds should insist on the consent from the HOA or not. Where the condition reads as follows:
"The erf may not be transferred to any person who has not bound himself to the HOA …………."
The said condition requires the consent of the HOA.
Where the condition however reads:
"The owner of the erf may not transfer the erf to any person who has not bound himself to the HOA ………………………etc."
The condition does not require the consent of the HOA, as the condition only becomes operative and enforceable after registration of the erf into the name of the new owner.
The above discussion is merely a guideline and each set of conditions must be perused thoroughly to determine whether the consent of the HOA must be lodged or not.
Republished with permission from SA Deeds Journal
Home owners associations
Reader Comments:
What happens if the property was sold; - an HOA clause is part of the existing title deed; - the HOA is inactive and has never been active and no trustees were appointed or Constitution or Conduct Rules drawn; THUS there is no one who can sign a Consent to the transfer of the property?
Where the HOA has never come into existence, even if it is a registered title condition, then the condition is of no legal force or effect, and it can be removed by means of a simple section 68(1) application - accompanied by proof acceptable to the Registrar. Every personal servitude must be capable of being exercised by some or other person, and if such a person does not exist, the servitude is a nullity.
This situation should never arise, but if it does, the seller is going to have to get the HOA established and office-bearers appointed so that the HOA can issue the clearance certificate required for transfer. Start by getting a copy of the ROD approving the subdivision that underlies the HOA. This will provide information you need and will probably include a requirement that the constitution or MOI be approved by the local municipality.
While Mr Paddock's suggested course of action will bring a HOA into existence, it does not cure the problem of the condition being a nullity from the outset. The coming into existence of the HOA ex post facto cannot cure the nullity. The condition must be removed in terms of section 68(1), and then re-created by notarial deed between the owner and the HOA - after the HOA has come into existence.
Mr Christie's suggestion that the condition imposed by the LM on approval of the township is a nullity needs very careful investigation based on the actual facts of the matter. While it appears to provide a solution to the seller's problem, the process of retro-fitting the HOA to the township is likely to be complex and expensive, and the uncertainty as to who is responsible for maintenance of the infrastructure and whether the owners have the right to exclude the public is likely to negatively affect the property values. Hopefully a close examination will show that the the developer and at least one purchaser did agree to the terms of the HOA constitution before the first transfer so that the LM and the community will not have to start again.
Please note that a condition in terms of an HOA can never be cancelled in terms of section 68 of the DRA as it is a condition created in favour of all the owners. It can thus only be cancelled in terms of an order of court or legislation like the Removal of Restrictions Act.
Hi Allen, If the condition has been imposed in accordance with the local municipality's terms of approval of the major subdivision, as is usually the case, would the Deeds Registry not also see the local municipality as having a vested interest in the issue of its removal?
I disagree. It's true that it usually is the local authority that requires that the owners become members of a Home Owners Association, but the condition in favour of the particular Home Owners Association is created in the power of attorney to transfer the erf to the first purchaser, and the particular Home Owners Association accepts such negative servitude in writing, in terms of Section 65(1).
In my opinion, such conditions are therefore personal servitudes like any other, and may be removed in terms of Section 68(1).
Please refer to the numerous Registrars Conference Resolutions providing that only the Court can authorize the transfer without the consent from the HOA, irrespective of whether it was constituted or not. Furthermore in terms of case law where a condition was imposed for the benefit of the owners of a township, it no can only be removed by the court or legislation.
I accept the case law, but isn't the condition in favour of the HOA a negative servitude which encumbers the property of all the owners in the township, and not per se a condition for their benefit?
I have a transfer where there are only 4 erven in the HOA. The HOA was formed however it ceased to charge levies approximately 4 years ago and nothing further was ever done. It does not have a managing agent either. Will a Consent signed by all owners in the HOA suffice?
What happens in the case where there is no mention of a HOA in the title deed or purchase agreement? Although it was a condition of the local council to be come a member of the HOA once properties was purchased.
Does the homeowner association have the right to collect fees from people which have no mention of a HOA in their deed of sale? we have about half of the people without a mention in their title deed.
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