The lock-up and go lifestyle afforded by cluster housing developments, townhouses and apartments has become popular in South Africa. This lifestyle provides a number of advantages including convenience, relatively low maintenance and security.
Sectional Title ownership is one of the options available to persons who opt for this lifestyle. There are however certain potential disadvantages to Sectional Title ownership and, as a result, some people who wish to live in a community environment are opting to purchase freehold units in group housing schemes. In our area these schemes are often known as cluster housing developments or complexes.
Some people seem to be under the impression that ownership of a unit in these cluster housing developments provides all the advantages of lock-up and go community type living without any of the disadvantages of Sectional Title ownership. People purchasing such units should be aware that there are also potential pitfalls involved in this alternative type of ownership.
At this time there is no legislation governing the management of these developments. The Sectional Titles Act does not apply to these developments. However, as with Sectional Title, these complexes invariably have common property including roads, parks, lawns and the like which must be maintained. Levies are payable in respect of the maintenance of the common property. The collection of levies and maintenance of common property obviously requires a certain amount of control and management.
Furthermore, community living necessitates a certain degree of control over persons living within the community. In Sectional Title schemes the rights and obligations of the owners and the body corporate are governed by the Sectional Title Act and the management and conduct rules applicable to the scheme. As I mentioned above, with freehold cluster developments there is no legislation governing the management and control of these developments.
In practice, the developer normally creates a Home Owners Association (HOA). The deed of sale relating to the purchase of such a unit contains a condition that the purchaser will become a member of the HOA. The title deed to the property also contains a condition to this effect. Sometimes the developer also attends to having a constitution drawn up which sets out the “rules” applicable to the development. These constitutions are however very often not nearly as comprehensive as the management and conduct rules applicable to Sectional Title schemes. I have been consulted on a number of occasions by owners of units in cluster housing developments regarding problems that they are experiencing with the running of the complex. In some cases there was not even a constitution in place and in others the constitution was inadequate. In the worst-case scenarios owners in these developments sometimes find themselves in a position where there are no or inadequate guidelines relating to the running of the scheme.
In my opinion developers should ensure that the necessary documentation and infrastructure relating to the running of the development is put in place prior to selling off units. At the very least a HOA and an appropriate constitution should be created. Alternatively, (and perhaps preferably) a Section 21 Company should be created to govern the HOA.
Prospective purchasers of units in freehold cluster housing developments should ensure that the deed of sale contains a condition to the effect that all owners in the development are members of the HOA. They should furthermore ensure that the necessary documentation and infrastructure relating to the management of the complex has been put in place prior to them purchasing.
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