Community Schemes appear to have become a fertile field for confrontation among the residents both owners and tenants who reside there. Every owner in a Sectional Title community scheme automatically becomes a member of its Body Corporate in terms of the legislation regulating ST Schemes (Sectional Titles Schemes Management Act – STSMA) or if a member of the Home-Owner Association then membership is in terms of the Memorandum of Association of the scheme, and the title deed conditions for the property that forms a part of the scheme.
The scheme executives for the scheme, who voluntarily give of their time for no reward, are elected by the members at the scheme’s AGM to control and manage the affairs of the scheme. Confrontation in schemes can thrive if strong management of the scheme is not in place, and particularly if there are personal agendas at play in the various relationships of role-players who manage the day to day running of the scheme.
Sometimes disagreements between parties living in a community scheme spiral into court cases where owners sue one another, the scheme executives or even the scheme itself, often on allegations of defamation based on what was allegedly said or accusations of unfairness for actions taken that are often based on the interpretation of how the scheme’s governing legislation should be applied by the scheme executives, in order to deal with a particular dispute usually involving the scheme’s common property or between members.
For a Body Corporate the question then arises as to whether a Body Corporate can be sued or sue, and if all members of the scheme relinquish any rights they might have, to take legal action in terms of the STSMA or common law in their own names, where common property is involved.
In a Constitutional Court appeal judgment involving a Body Corporate and some of its members, the court stated that “…the body corporate here could not initiate proceedings in pursuit of the cause of action advanced by the applicants. The body corporate had no authority to institute proceedings in relation to a cause of action based on the common law.” At issue was the application of the applicable governing Sectional Title Legislation at the time of the dispute regarding zoning of the common property and whether such a ruling pertained to all aspects of Sectional Title legislation despite what is stated in the STSMA.
In a High Court case the judge stated that though when viewed in isolation, the statement by the Constitutional Court is potent and persuasive, it must however be considered in its context. The Constitutional Court was dealing specifically with owners’ common-law rights to enforce the zoning regulations that pertained to their property. In that context, the Constitutional Court concluded that the body corporate would have “no direct and substantial interest in those proceedings”. The High Court judge was of the opinion that the Constitutional Court didn’t intend that one of its single sentences used in its judgement on this particular issue would be used to serve as a general statement of the law pertaining to the question whether a body corporate may sue or be sued on a common-law claim that it had a legal interest in.
STSMA legislation in Section 2(7) of the STSM Act states that “A body corporate has perpetual succession and is capable of suing or being sued in its corporate name in respect of the five matters referred to in this section of the STSM Act.
These five matters are:
(a) any contract entered into by the body corporate;
(b) any damage to the common property;
(c) any matter in connection with the land or building for which the body corporate is liable or for which the owners are jointly liable;
(d) any matter arising out of the exercise of any of its powers or the performance or non-performance of any of its duties under this Act or any rules; and
(e) any claim against the developer in respect of the scheme if so determined by special resolution.’
It would thus appear that a body corporate may sue or be sued only in respect of these matters listed in Section 2(7) (a) to (e).
A Homeowners’ Association (HOA) is a body comprising of the homeowners of a specific residential community scheme entrusted with the running of the estate and communal affairs of those that own homes there. An HOA’s right to sue a party would be done in terms of the provision of its MOI and the companies Act. A HOA can only be held liable for those areas of responsibility that it is specifically obligated to do so in its memorandum of incorporation or where it has been contractually agreed to by the HOA with the homeowners of the community scheme.
When owners chose to purchase property within a Homeowners Association (HOA) community scheme they become members of the scheme’s Homeowners Association in terms of the title deed and the Memorandum of Association, and by virtue of their doing so they thus also agree to be bound by its rules.
Whitfields will provide support in whatever way it can, in assisting scheme executives and residents residing in the community schemes that we manage, regarding compliance with legislation governing their community scheme.