SECTIONAL TITLE
What is the difference
between an HOA ( homeowners ’ association ) and a Body Corporate ?
People often ask what the difference is between a homeowners ’ association ( HOA ) and a Body Corporate – or if they are similar .
Auren Freitas Dos Santos , legal and compliance officer and property manager for Pam Golding Property Management Services explains : “ An HOA and a Body Corporate are certainly not the same . A Body Corporate is a legal entity created in terms of the Sectional Titles Act and managed in terms of the Sectional Titles Schemes Management Act . The fundamental principal behind a Body Corporate is the division of a property into parts that are exclusively owned by individual owners and other parts that are jointly owned in undivided shares , referred to as common property . The functions of a Body Corporate are strictly defined in terms of Section 3 of the Sectional Titles Schemes Management Act .
“ An HOA on the other hand is not created in terms of any specific national legislation and the common property is usually transferred to and registered in the name of the HOA which exists as a legal entity separate from its members , none of whom shall in their personal capacities have any right , title or interest to or in the property , funds or assets of the HOA .
“ The main functions of an HOA differ depending on the founding document of the HOA . Some HOAs are governed in terms of a Memorandum of Association while others are governed in terms of a Constitution . Irrespective of the type of founding document the most common functions of an HOA shall usually be the following :
• the control over all aspects of the design , aesthetics and maintenance of all buildings , improvements and landscaping within the development
• to ensure compliance with the estate rules
• the maintenance , control and management of the common areas within the development
• the promotion , advancement and protection of the communal and group interests of the members generally in regard to the development
• to enter into service agreements and other necessary agreements with the local authority or any other authority or supplier of services in connection with the development
• to generally do all such things as may be necessary or requisite to give effect to and implement the objects of the Association and to do all such things ancillary or incidental to the objects
• to ensure that all erven within the development are developed as soon as is reasonably possible
• to enforce the conditions of subdivision approval or management plans listed in the conditions registered with the local municipality .”
How is an HOA created ? Dos Santos says an HOA is usually created either as a nonprofit company in terms of section 21 of the Companies Act or as a common law association . There are also provincial and / or municipal statutes which often govern the establishment of HOAs , for example , the City of Cape Town Municipal Planning By-Law , 2015 .
“ Irrespective of the law governing the establishment of an HOA , almost every HOA is created as a result of a condition of subdivision approval for a new development . In other words when a developer intends to subdivide a large piece of land into smaller separate pieces of land it is usually required by the local authority to create an HOA with the aim of managing and controlling the common property linked to that development . The HOA shall come into existence simultaneously with the registration in the Deeds Office of the first of the erven in the subdivision , whereafter each and every purchaser of an erf situated within the development , and their successors-in-title , shall automatically become members of the HOA ,” he says .
“ It is however possible to create an HOA subsequent to the establishment of a township / development . This usually occurs when a group of individual home owners band together to formally agree to the formation of an HOA . In such an instance it is an absolute requirement that each and every home owner agrees to the formation of the HOA before the founding document of the HOA is binding upon that owner .
“ This will usually occur when a group of owners situated in a neighbourhood enclave of freestanding properties decide that it would be advantageous to establish a security
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