A Paddocks Sectional Title Lifestyle Blog
By Anton Kelly
The constitution is the fundamental governance documentation for home owners’ associations (HOAs) if the HOA is a common law association, or the memorandum of incorporation (MOI) if the HOA is a non-profit company, previously known as a section 21 company.
Despite this, almost all HOAs have additional documentation that restricts the way members can use their properties, conduct rules and architectural and landscaping guidelines being the most common. The question could be, though, are rules and architectural guidelines binding on HOA members?
The Companies Act provides that the MOI of a company is binding on its shareholders, which in a non-profit company means its members. The constitution of a common law association will make the terms of the constitution binding on its members.
Both the MOI and the constitution will specify that its members are the owners of the individual properties in the HOA and that they cannot resign that membership. Additionally, the title deeds of the individual properties should make membership of the association a condition of ownership.
The terms of the constitution and MOI are therefore binding on the owners in the HOA but unless the conduct rules and architectural and landscaping guidelines are included in the constitution or the MOI, they may not be binding.
Conduct rules and estate guidelines are not usually included in the constitution or MOI because changing them would involve the complexity of changing the constitution or MOI. The local municipality conditions of subdivision approval usually require the municipality to consent to changes, and if the HOA is a company, the change would have to be registered with the Companies and Intellectual Property Commission (CIPC).
The constitution or MOI must therefore specifically provide for conduct rules and estate guidelines and make them binding on the members, and provide a mechanism for enforcing them and amending them from time to time.
The conduct rules and estate guidelines documents should likewise refer to the clauses in the constitution or MOI that refer to them. It is very important that the cross references are made in the HOA governance documents, to ensure that the rules and guidelines are binding on the members.
If you have any doubts about the validity of your HOA’s rules and guidelines, please contact firstname.lastname@example.org for a no obligation quote for an opinion by a specialist community scheme attorney.
Image source: Daniel McCullough on Unsplash