While buying a piece of land to build your home on in a security estate or gated community may seem like a dream come true to many people, make sure that you read all of the Home Owners Association (HOA) rules and regulations before signing on the dotted line.
The property boom, he says saw many people buying spec plots hoping to make a quick buck, then finding they were either not able to build at all or not able to complete building that had started when the economic crisis hit.
With soaring building costs and the economic climate still unstable, be sure you know exactly what you are getting yourself into when buying a piece of land to build your dream home on in a gated community or security estate, says Johann le Roux, Executive Director of Propell.
HOA’s have strict penalties in their rules and regulations with regards to building on purchased plots, he says.
The property boom, he says saw many people buying spec plots hoping to make a quick buck, then finding they were either not able to build at all or not able to complete building that had started when the economic crisis hit.
Most HOA’s insist that building must be completed within a specified time of purchasing the land. He says this is to ensure that the private estate or gated community is able to reach its true investment value within a set time period.
Also, to safeguard other owners from having to deal with continuous building in the estate, which has many risks and implications all on its own. Failure to complete the building within the specified time periods will result in penalties.
Penalties can vary, he says, but are generally significantly higher than the normal monthly levy, sometimes as much as ten times the amount. This can put an already financially burdened individual into serious distress.
Penalties are charged either for failure to start building within the specified time period or for failure to complete building that has commenced within a specified time period.
So before buying the plot of your dreams within a private estate, make sure you have enough funds to complete the building within the HOA’s set time limits, or that you are able to pay the penalty levies that will be imposed.
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