5 Key Considerations for Buying Property in an HOA or BC

When purchasing a property within a Homeowners Association (HOA) or Body Corporate (BC), it’s crucial to consider several factors to ensure a harmonious living experience and protect your investment. 

Five key considerations for property buyers who are not building their house:

1. Review governing documents and rules:

Thoroughly examine the HOA or BC’s governing documents, including the management and behavioral rules, you could also review the municipality bylaws, and any additional rules. These documents outline property use restrictions, maintenance obligations, and community standards. Understanding these guidelines is essential to ensure they align with your lifestyle and expectations. 

2. Assess financial health

Evaluate the latest AGM document which would include an annual financial review. A well-managed estate would include a reserve fund which indicates the association’s ability to handle maintenance and unexpected expenses, reducing the likelihood of special assessments that could impose additional costs on homeowners. 

3. Understand levies and assessments

Inquire about regular levy amounts.. Understanding the fee structure and any potential increases is vital for financial planning and avoiding unexpected financial burdens. 

4. Examine community management and governance

Investigate how the HOA or BC is managed, including the roles and responsibilities of the board and any management companies involved. Effective and transparent management is crucial for maintaining property values and ensuring a positive community environment. 

5. Review Policies on Rentals and Alterations

If you plan to rent out the property or make modifications, understand the association’s policies on rentals ( short and long-term) and property alterations. Some associations have strict rules regarding rentals and require approval for changes to the property, which could impact your plans. 

Here are five additional key considerations for buyers intending to build their house within the development

1. Architectural guidelines and approval processes: Obtain and review the association’s architectural guidelines to ensure your building plans comply. Understand the approval process, including timelines and required documentation, to prevent delays. 

2. Construction regulations and restrictions: Be aware of any restrictions on construction activities, such as working hours, noise limitations, and site maintenance requirements. Compliance with these regulations is essential to avoid fines and maintain good relations with the community. 

3. Builder approval requirements: Some associations may require the use of approved builders or have specific criteria for contractors. Ensure your chosen builder meets these requirements to avoid complications. 

4. Timeline for construction completion: Understand any deadlines imposed by the association for completing construction. Failure to adhere to these timelines can result in penalties or other enforcement actions. 

5. Impact on community and neighbour relations: Consider how your construction project may affect the community, including potential disruptions and the importance of maintaining open communication with neighbours and the association to address concerns proactively. 

By carefully considering these factors, you can navigate the complexities of purchasing or building a home within an HOA or BC, ensuring a smoother process and a more enjoyable living experience.

In South Africa, property practitioners are legally obligated to disclose specific information to prospective buyers considering properties within a Homeowners Association (HOA) or Body Corporate (BC).

Key disclosures include:

1. Governing documents: Agents must provide access to the HOA or BC’s governing documents, including the management and behavioural rules, and conduct rules. These documents outline property use restrictions, maintenance obligations, and community standards, which are essential for buyers to understand.

2. Financial statements/ Latest AGM: It’s imperative to disclose the financial health of the HOA or BC by providing recent audited financial statements. These statements reveal the association’s financial stability and any potential liabilities that could affect the buyer.

3. Levy obligations: Agents should inform buyers about current levy amounts, payment schedules, and any special assessments. Understanding these financial commitments is crucial for buyers to assess affordability.

4. Management details: Disclose whether a managing agent oversees the property and provide their contact information. Managing agents play a pivotal role in property administration, and their details are vital for transparency.

5. Pending legal matters: Inform buyers of any ongoing legal disputes or compliance issues involving the HOA or BC. Such matters can have significant implications for property ownership and future obligations.

By ensuring these disclosures, property practitioners help buyers make informed decisions and promote transparency in property transactions within community schemes.