SA Affordable Housing September - October 2019 // ISSUE: 78 | Page 36

LEGAL MATTERS
SPONSORED BY STBB
Questioning developers'
levy liability in new township
HOA development
There are fairly regular incidences of
judgments where developers question their
liability for owner levies in respect of erven
in townships opened on large parcels of
land they own.
By Maryna Botha
B o
H
ere, we look at a the outcome of a recent
judgment dealing with the above question,
to assist developers and their legal teams
to better anticipate the liability that will
be attributed to the developer in different
circumstances.
SABLE HILLS WATERFRONT ESTATE HOME
OWNERS’ ASSOCIATION NPC V SABLE HILLS
WATERFRONT ESTATE CC
The background to this judgment is that in March 2006, Sable
Hills Waterfront Estate CC (the developer) took transfer of
a property on which, simultaneously, a township register
was opened which subdivided the land into 307 erven in
accordance with a general plan. All registrable transactions
affecting the respective erven shown on the plan thus had
to be registered with reference to the township register. The
developer had applied to the local authority to establish
the township of Sable Hills Waterfront Estate and this was
approved. (All the erven and sectional title units in the
township register were residential properties.)
A homeowners’ association was established and
in accordance with the provisions of the Articles of
Association of the Sable Hills Waterfront Estate Home
Owners’ Association NPC (the HOA), the HOA’s income
consisted mainly of the compulsory monthly levies
payable by members, and which would be applied to the
furtherance of the HOA’s main objective. The governing
documentation provided further that the HOA’s members
are the developer and all other persons who are registered
owners of residential property in the township. At the time
of the application to court, a large proportion of erven in
the township register had not yet been transferred to third
parties. This was the basis of the dispute that arose regarding
the developer’s liability for levies.
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a, D
i r e c t o r : S T B B
On the one hand, the HOA argued that the developer, as
registered owner of the erven in the township register
that have not yet been transferred, is an ‘owner’ within the
context of the HOA’s Articles of Association, and was thus
liable to pay levies in respect of each of the erven concerned.
On the other hand, the developer contended that it was not
the registered owner of ‘property’, as defined in the Articles
of Association of the HOA and thus not liable to pay any
levies; alternatively that it was the owner of the collective
remainder of the township, in other words, the remaining
unsold erven constituted one property, and thus only liable
to pay levies in respect of one property.
The essence of the dispute between the parties was
whether the ‘remaining extent’ comprised of the erven and
units reflected in the general plan concerned that were not
yet transferred to third parties; or whether it constituted
land not defined as ‘erven in the township and units in
the schemes’ in the HOA’s Articles of Association, and is
therefore not yet ‘property’ as defined in the Articles (as the
developer contended). (‘Property’ was defined in the Articles
of Association as meaning ‘erven in the township and units in
the schemes’. The expressions ‘stands’ and ‘erven’ have the
same meaning and are used interchangeably.)
The Supreme Court of Appeal (SCA) referred to section
102 of the Deeds Registries Act where the term ‘erf’ is
defined as: “… every piece of land registered as an erf, lot,
plot or stand in a deeds registry, and includes every defined
portion, not intended to be a public place, of a piece of land
laid out as a township, whether or not it has been formally
recognised, approved or proclaimed as such,” and the term
‘registered’ is defined: “… registered in a deeds registry.”
The SCA noted that the impact of these two definitions in
the context were such that every erf depicted on a general
plan is deemed to be registered upon registration of the
general plan. With regard to subdivided land, section 46(1) of
the DRA provides that if land has been subdivided into erven
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