Estates of Play: BG Vol 2 issue 11

In this issue of BG, the discussion is with Louise Martin (Estate Living) who is the founder and CEO of Estate Living, and BG’s property ‘guru’.

In a sense although the ‘fit’ with Estates of Play is perfect for this discussion, the narrative is in fact something of a crossover from ‘Agents’ in golf, which was our focus for a few issues prior to BG 10.

There is old saying about the English (but I think that it or an equivalent of it can be applied to homeowners everywhere) about an Englishman’s home being his castle. In this is the sense of security and the implied right for British people to be able to do what they want in their own home, and by extension that other people, or the state, should not interfere in their private lives, or what goes on inside the ‘4’ walls of someone’s home.

Given that the price of an average home can cost more than several castles, in terms of the time when this phrase first saw the light of day, a home purchase is a serious matter for most people.

With this as the background, I opened the discussion with Louise, by recapping my general sense of personal disappointment with Property Practitioners (formerly known as estate agents)  that I have had to deal with (not all of them, but a significant enough number to warrant my concern),  and asked, given the vital connective role that agents (especially the professional ones) play in the property purchase/sale process, and given that caveat emptor applies in every business sector, what should we be expecting from an agent, as a buyer?

Estate Living: Yes, your comments during the Agents section were concerning, because the property industry, as a whole, prides itself on being ethical with good levels of governance and accountability, and in its being professional. 

Therefore, any deviation from these standards can quickly blight the industry as whole, or compromise public opinion about a sector within it!

You also referred to caveat emptor, which I feel is a key remark.

BG: OK, so the process is not just about what the agent knows, or should know, about a property, but also what the buyer needs to know, and or should be prepared to ask?

Estate Living: Exactly, and this becomes even more important as there can often be more than three or more ‘layers’ in the process, including the agent, buyer, seller and an association such as a body corporate or HOA (homeowners association). 

BG: In that case, can you offer us a high strokes summary of what you feel are the key points in this ‘triangular’ discussion?

Estate Living: My take on this is as follows:

The top FIVE facts to know when you are buying, building/ renovating or selling a property within a community scheme (Homeowners Association or Body Corporate) When purchasing a property within a Homeowners Association (HOA) or Body Corporate (BC), it’s crucial to consider several factors, so as to ensure both a harmonious living experience, and to protect your investment. 

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

• Review governing documents and rules: Thoroughly examine the HOA or BC’s governing documents, including the management and behavioural rules, and 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. 

• Assess financial health: Evaluate the latest AGM document, which would include the 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. 

• 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. 

• 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. 

• Review policies on rentals and alterations:  If you plan to rent out the property or make modifications, understand the association’s policies on rentals (both 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:

• 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. 

• 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 within the community. 

• 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. 

• 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. 

• 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). 

FIVE of the key disclosures would 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 is 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.