I N V E S T
&
d e v e l O P
WHAT DETERIORATING MUNICIPAL
INFRASTRUCTURE MEANS FOR RESIDENTIAL
ESTATES
Not a day goes by without one hearing of some municipal crisis somewhere in the country. These
range from banal but extremely annoying stories of billing crises, lack of budgetary control and bloated
bureaucracies to the horror story unfolding in Emfuleni, where total collapse of the municipality as a
functional entity has unleashed a tsunami of raw sewage flowing unabated along the streets and through
the buildings, as it makes its way to the nearest river.
Then there was the international headline-grabbing story
of Day Zero as Cape Town faced the very real possibility of
simply running out of water, and the disturbingly frequent
violent confrontation on the streets as communities protest
against lack of service delivery, or as striking municipal workers
demand salary increases that have no bearing on productivity or
affordability.
In short, our municipalities are in crisis, but the implications are
yet to be felt by every citizen of this country.
One response has been the migration of people, typically in the
middle- to upper-income bracket, into residential estates. The
growth of these enclaves of relative calm and tranquillity has been
in direct response to the rate of collapse of the municipalities as
functional entities.
So, what are the implications of this to both residents and
owners of real estate in residential estates? Are homeowners
associations (HOAs), bodies corporate (BCs) and managing
agents (MAs) increasingly replicating the role once fulfilled
by municipalities? As these roles change, what of the liability
landscape that is emerging? What are the risks that lie invisible,
but lurk ever present to trustees as they fulfil their fiduciary role,
but without financial compensation to offset potential personal
liability?