HOAs – familiarizing yourself with the rules and regulations of a body corporate

Buying into a sectional title offers numerous benefits.
From the additional security to the shared maintenance costs and a greater sense
of community. Yet, to enjoy these benefits, buyers are required to abide by the
regulations set out by the complex’s body corporate and homeowners association (HOA).

Adrian Goslett, Regional Director and CEO of RE/MAX of
Southern Africa says there are many advantages to purchasing a sectional title
but, challenges can arise, and these benefits could be dampened if buyers are
not fully aware of the rules and regulations stipulated by the body corporate.

It is imperative first to obtain a copy of and carefully read through the rules that govern the scheme before buying a sectional title home. If there is anything that is unclear, it should be clarified with the trustees before signing on the dotted line” he says.

For buyers who are hoping to renovate their sectional title
unit after purchasing, it is highly unlikely that the body corporate will give
approval to the agent or the purchaser prior to the transfer being finalised
says Kevin Jacobs, broker / owner of RE/MAX Premier.

The correct process would be for the current owner to obtain approval prior to transfer. If this was a condition of the sale stipulated in the OTP as a special condition, then the seller would have a legal obligation to fulfil such conditions prior to transfer. However, if this planning approval was not stipulated in the contract, then the seller has no obligation to obtain such approval prior to transfer,” he clarifies.

Buyers who hope to see a copy of the
estate’s financials – which is highly recommended as a way to ensure the estate
is not running at a loss – will have to do so through the seller as body
corporates generally do not provide financials to prospective buyers unless
instructed to do so by the seller.

Delays may also occur when it comes to receiving a copy of the most recent financials as this might not be available at the time of a buyer showing interest. “It all depends on when the complex’s financial year end is. However, the seller should have a copy of the previous years’ audited financials that can be shared with the prospective buyer. In the meanwhile, the body corporate can supply a letter confirming that its financials are in good standing and are awaiting the final draft from the auditors. This letter should also confirm the expected date of completion,” he advises.

Jacobs also points out that most banks
will not approve bond finance without a copy of the latest audited financials,
so buyers may need to sit tight before their home loan can be approved.

There is little doubt that sectional title properties will
remain a sought-after purchasing option among buyers. But, as with all property
purchases, those who opt to buy a sectional title unit should take the time to
do their research and consult with a local real estate advisor to ensure they
are making an informed decision
,” Goslett concludes.

Source: Propertywheel.co.za | https://propertywheel.co.za/2020/10/hoas-familiarizing-yourself-with-the-rules-and-regulations-of-a-body-corporate/

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