HOA levy defaulters: Prevention is better than cure
Category RealADVICE
If you live in an estate, you know that there are always those who are reluctant and slow to pay their monthly levies - and a couple who don't pay at all unless the home-owners' association (HOA) starts to take legal action against them.
You also know how unfair it seems that these owners should continue to enjoy all the benefits of living in a gated community - including the added security and access to the clubhouse and private sporting facilities - without paying their share of what it costs to keep providing those benefits.
"In fact, because HOA budgets tend to be lean, the failure by one or more owners to pay their levies is not only conceptually unfair," says Gerhard Kotzé, MD of the RealNet estate agency group.
"It also places a real additional financial burden on the remaining homeowners who are prepared to protect the value of their properties by paying to ensure that the estate is well-maintained."
And while the Community Schemes Ombud Service (CSOS) Act does provide for the HOA to resolve a dispute with a levy defaulter by making use of the mediation and arbitration services offered by the Ombud's office, this can take a considerable time, during which the debt continues to mount up and the delinquent homeowner usually continues to enjoy the amenities and facilities that are being paid for and maintained by other members, he says.
"Taking legal action against a defaulter to obtain a debt judgment can also be both time-consuming and expensive, placing a further strain on the HOA budget, so as an alternative, we suggest that HOA members put advance measures in place to prevent default situations from arising in the first place."
Kotze says one such measure is to add a "suspension of access" provision to the HOA's constitution. "Of course the HOA cannot legally stop a defaulter from driving to his property or enjoying the protection of the security system. It can also not disconnect the electricity or water supply to his home.
"However, it can arguably stop him and his family from accessing and using communal facilities such as a clubhouse, a gym, tennis courts, swimming pool, playgrounds, running or walking trails and visitor parking until such time as his levies are up to date."
To be fair, he says, the resolution to add such a clause to the HOA constitution should be considered and accepted by the majority of owners at a general meeting, not just the HOA directors. The clause should also include a provision that the defaulter will be given adequate notice prior to his access to common facilities being suspended.
"And to ensure that it is enforceable, as with any other change to the HOA constitution, it needs to be approved by and registered with the Ombud.
Author: RealNet
