What is the difference between a Home Owners’ Association and a Sectional Title Scheme?
By Ané de Klerk
Home owners’ associations (commonly referred to simply as “HOAs”) are becoming ever more popular each year. These community schemes, consisting of individual properties, which are exclusively owned by members, but grouped together with communal infrastructure such as roads, security services and recreational facilities, offer owners the privacy and comfort that comes with owning one’s “own home”, combined with the benefits that come with community living.
When those who previously owned a cosy apartment in the city, make the move to a family home in a suburban home owners’ association, they are often confident that they know all there is to know about community scheme management, but what are the important differences between these types of schemes and do these schemes share any similarities?
Some important differences between sectional title schemes and HOAs:
- In sectional title schemes, parts of the building(s) are exclusively owned, while all the owners share ownership of all other parts of the building(s) and the land. HOAs, on the other hand, operate on the basis of a combination of direct and indirect conventional ownership. In an HOA, each owner obtains registered title to a conventional property, held under a title deed and described on a registered diagram or general plan as they would with any freehold land in a South African township.
- Owners in sectional title schemes are able to hold “exclusive use rights” in terms of which the owner of a section may enjoy the benefits of an arrangement with the body corporate whereby they alone have the right to use a specific part of the common property. In home owners’ associations no such “exclusive use rights” exist.
- Owners in sectional title schemes are able to hold “exclusive use rights” in terms of which the owner of a section may enjoy the benefits of an arrangement with the body corporate whereby they alone have the right to use a specific part of the common property. In home owners’ associations no such “exclusive use rights” exist.
- In a HOA for an entirely private development, the infrastructure and any other parts of the property that are to be used by the members jointly are transferred to, and registered in the name of the HOA at the deeds registry; whereas in sectional title schemes, common property is owned in undivided shares by all the owners of sections and merely administered by the scheme’s body corporate.
- Sectional title provides for ownership in different levels or “strata” on one or more pieces of land that forms part of the common property. Common practice in HOA is that each separately owned building is situated on a separate piece of land (although it is possible to have a sectional title scheme developed on a property within a HOA in a “layered scheme”).
- The common property, sections and registered exclusive use areas in sectional title developments are shown on one or more sectional plans, whereas the conventional properties in an HOA are shown on a general plan or separate diagrams.
HOAs and sectional title schemes do share some similarities:
- Both types of developments are “community schemes” for the purposes of the Community Scheme Ombud Service Act, No. 9 of 2011 and are therefore required to comply with this act and the regulations made thereunder.
- Each member of the management body (the association or body corporate) is also the registered owner of a property within the community scheme and membership of such management body is compulsory for all owners of units or homes within the schemes.
- In both types of schemes, there is financial and administrative interdependence between the members of the scheme.
- Both sectional title schemes and HOAs exercise control over owners and occupiers’ behaviour and dealings with the individually owned property within the scheme.
- Both schemes’ management bodies levy contributions from its members to raise funds to perform its functions and cover its operating costs.
- Property owned by members of these management bodies cannot be transferred without first obtaining a levy clearance certificate from the particular management body concerned.
Should you require assistance in understanding how your HOA operates and/or how the management thereof differs from other types of community schemes, don’t hesitate to contact the writer at consulting@paddocks.co.za for a no-obligation quote to provide the necessary legal assistance.
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