Advice and Opinion

Home owners association rules need to be checked before purchasing

Rules & Regulations

With security estates increasingly becoming sought after places in which to live, particularly where people are looking for the “safe” environment estates offer, it is important that purchasers be made aware of certain points before they decide on a particular estate, says Michael Bauer, managing director estate agency

“In many cases, the buyer does not read the conduct or the management rules (often referred to constitution or memorandum of incorporation) of the scheme before they sign an offer to purchase, and agents must ensure that their buyers do not make this mistake. When buyers sign a purchase agreement, the usual process is to go through the financial documents of the scheme they are interested in, and all the rules (which may include, but not limited to, the constitution, conduct rules, architectural design guidelines, landscaping guidelines) should be attached to the same agreement, so that they can go through these as well”, said Bauer.

“It is very important that buyers check whether the rules could possibly have punitive conditions, such as penalty interest for building, which could impact negatively on their enjoyment of living there as well as general rights to comforts within the scheme”, he said.

Some of these rules relate to building codes and architectural guidelines but some of these also relate to services within the estate, fines that can be imposed for misconduct or breach of the rules or non-payment of levies. Some prohibit the ownership of pets, or place conditions on the type or size of pets allowed.

“The HOA rules should, if the home is to be rented out on a long or short term let, also be given to the tenant to read and to sign before they move in”, said Bauer.

Owners and tenants are bound by the HOA rules, however onerous they might be, and there have been cases where the HOA’s processes included preventing owners or tenants from buying electricity and water vouchers for the prepaid meters until the breach was remedied. There have been instances where the rules also made provision for dealing with unpaid levies in the same way, in that no electricity or water top-ups could be bought unless the levies were up to date.

“The owners of properties in any estate are legally bound to the HOA rules as these registered as a title deed restriction in favour of the HOA and tenants are obliged to follow the same rules as owners in the estate. While these are usually put in place to protect the interests of all the owners in the estate, they can become or be seen to be an infringement on the basic rights to an enjoyment of a property”, said Bauer.

“Buyers must be sure that they can abide by all the rules if buying into an estate run by an HOA or body corporate, as these are not likely to change and challenging them later can be a lengthy and expensive exercise”, he said.