So says Berry Everitt, CEO of the Chas Everitt International property group, who notes that levies collected each month are intended for the upkeep of communal property such as gardens, recreation facilities, fences and security systems, and should be managed by an HOA set up by all the owners in that particular gated community.
"HOAs are non-profit companies usually put in place when a new development is handed over to the new owners, who then elect a board of directors or a management committee to implement their HOA constitution," he explains.
"And typically, such a constitution should provide for the HOA to manage, operate and maintain common areas and facilities, and for the directors to draw up annual budgets for necessary expenditure as well as financial statements so that any member can see what the levies need to be and how they are being disbursed."
Everitt says the constitution should also contain a provision that major decisions likely to materially affect owners will be put to a vote and only carried if a majority of owners support them.
Examples of such issues include the introduction of new policies such as no pets being allowed; restrictions being placed on the rental of units; and the employment of outside contractors or a property manager.
Readers' Comments
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I have really learnt something I did not know what was the purpose of the levy. Thanks. - Anonymous
Home Owners Associations are an excellent way of owning property provided that they are well-run and managed. As rules can be created that are in any form it allows for a flexibility that may be lacking with sectional title ownership. However, it leaves the door open for poorly ruled complexes. One of the major problems that arise is where the developer retains an overriding ultimate control by having the right to override decisions of the HOA until such time as he is no longer an owner of any unit or development right. In effect this could mean that the developer can overrule any decision of the HOA for a very long time.
It is perhaps time that legislation is created to control this situation and to ensure that proper accounting and reporting to owners must be done on a regular basis. - Mike Spencer
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