Homeowners Associations (HOA) and Body Corporates
For a number of reasons, popularity of sectional title schemes and homeowners associations have risen over the last couple of years, including better security options, affordability and unique living spaces. Understanding the differences between these two bodies is a must for any prospective home buyer in modern day communal living.
What is the difference between a (HOA) Homeowners’ Association and a Body Corporate?
The Homeowners Association
If you form part of a homeowners association, you own the erf upon which your property is built. The association is established to look after the common roads, security and other communal areas that all residents are entitled to use and enjoy.
The costs associated with this management and maintenance are covered by a levy payable to the homeowners association. However, insurance, repairs and maintenance of each owner’s property is his or her own responsibility.
The Body Corporate
Sectional title schemes can be seen as a form of joint ownership – each owner exclusively owns a part of a building (e.g. an apartment or townhouse) and it is accompanied with shared ownership of other parts of buildings, pools and gardens to name but a few examples.
Levies in a sectional title scheme are normally higher than those of a homeowners association mainly due to the fact that levies are collectively received from all owners and put towards the maintenance of buildings, common property and insurance cover of the scheme.
Also, owners in a sectional title scheme can further own an area in the scheme which is seen as common property, known as Exclusive Use Areas. These areas remain common property within the scheme but the owner has the exclusive right to use the area for the duration of their ownership. A common example of an exclusive use area would be a parking bay that forms part of the common area but is set aside for the exclusive use of one particular unit owner.
Regulations
A homeowners association is normally incorporated as a non-profit company and is governed by the the Companies Act, No. 71 of 2008. A Board of Directors, elected by the residents, is entrusted to attend to the daily responsibilities, queries and enforcement of the rules.
Sectional title schemes are created and managed under the Sectional Titles Act, No. 95 of 1986. Similarly, a Board of Trustees is elected to assist with the running of the scheme. Further and in accordance with the Sectional Titles Schemes Management Act, No 8 of 2011, bodies corporate are now compelled to make provision for reserve funds on a ongoing basis.
Written by Wessel de Kock
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