Defunct Homeowners Associations and Consents to Transfer

Title deeds of cluster developments commonly contain a condition which states that alienation or transfer of a property by the owner is not allowed unless consent from the Homeowners Association (HOA) is provided. Usually inserted by the relevant local authority when approving the cluster development, this type of condition also confirms that all subsequent owners of the property automatically become members of the HOA.

Buying Property On Auction | Property Blog Articles

Problems arise, however, when an HOA becomes defunct. HOAs are juristic bodies, which means that authorised individuals need to act on their behalf. Should an HOA become defunct, it means there are no individuals to properly act on its behalf – and as a result, there is no one to confirm that the HOA consents to a transfer. 

Previously, the solution was simple: instead of providing the necessary consent to the Deeds Office, conveyancers could lodge a letter from the local authority confirming that the HOA was defunct and no longer active. This changed, however, with the introduction of the Registrar Conference Resolution 4 of 2018. 

The resolution confirmed that in instances where consent is required from a defunct HOA, either a court order must be obtained which confirms that transfer can occur without the necessary consent or the procedure set out in the relevant municipal planning by-law must be followed.

It’s worth bearing in mind that obtaining a court order can be a long and expensive process. In this instance, all members of the defunct HOA must form part of the court application together with the relevant bond holders. 

On the other hand, following the procedure set out in the local land planning by-law can also be a time-consuming process for the owner, as typically consent must be obtained from a number of owners in the cluster development.

It’s clear that defunct HOAs may cause delays in transfers. And it’s therefore advisable that should an HOA become defunct, the members re-establish it and appoint a member or members as trustees to assist with the signing of the consents required in terms of the title deed. In this instance, the assistance of an attorney or auditor may be needed to record or rectify any omissions or errors at the Companies and Intellectual Property Commission. 

Want more Snymans Articles? Sign up for our monthly newsletter.

Follow Snymans on Facebook for more legal information, tips and news about property.

Recommended for you

My name has changed - what happens to my property’s title deed?
Contractual Matters

Rules Board Regulates Non-litigious Fees[post_view before=""]

The introduction of the Legal Practice Act 28 of 2014 has led to several changes in the juridical space, including one related to non-litigious fees – fees charged by attorneys for services that do not constitute litigation and are not finalised in court.

Read More
My name has changed - what happens to my property’s title deed?
Contractual Matters

Corporate actions and resolutions[post_view before=""]

In South Africa, the business and affairs of a company must be managed by its board of directors. As such, the board is responsible for the daily corporate and commercial affairs of the company.

Read More
The difference between movable and immovable property
Contractual Matters

The conveyancing process explained[post_view before=""]

The conveyancing process starts with a signed Offer to Purchase and ends with the property being registered in the Deeds Office. But, there are numerous steps that need to be completed in between. Here’s a look at how the process unfolds.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Contractual Matters

Your home loan is paid up. What happens next?[post_view before=""]

Often, a bond will be paid up before the owner of the property decides to sell it. Here’s a step-by-step look at what he or she can expect once they reach this impressive milestone.

Read More
Minors and immovable property
Contractual Matters

10 conveyancing terms explained[post_view before=""]

When it comes to buying or selling a property, it helps to have a basic understanding of the many legal terms involved in the conveyancing process. Here’s a look at the 10 you’re likely to encounter most often, starting with conveyancing itself.

Read More

Need more Snymans content?

Sign up for our monthly newsletter.

Defunct Homeowners Associations and Consents to Transfer

Title deeds of cluster developments commonly contain a condition which states that alienation or transfer of a property by the owner is not allowed unless consent from the Homeowners Association (HOA) is provided. Usually inserted by the relevant local authority when approving the cluster development, this type of condition also confirms that all subsequent owners of the property automatically become members of the HOA.

Buying Property On Auction | Property Blog Articles

Problems arise, however, when an HOA becomes defunct. HOAs are juristic bodies, which means that authorised individuals need to act on their behalf. Should an HOA become defunct, it means there are no individuals to properly act on its behalf – and as a result, there is no one to confirm that the HOA consents to a transfer. 

Previously, the solution was simple: instead of providing the necessary consent to the Deeds Office, conveyancers could lodge a letter from the local authority confirming that the HOA was defunct and no longer active. This changed, however, with the introduction of the Registrar Conference Resolution 4 of 2018. 

The resolution confirmed that in instances where consent is required from a defunct HOA, either a court order must be obtained which confirms that transfer can occur without the necessary consent or the procedure set out in the relevant municipal planning by-law must be followed.

It’s worth bearing in mind that obtaining a court order can be a long and expensive process. In this instance, all members of the defunct HOA must form part of the court application together with the relevant bond holders. 

On the other hand, following the procedure set out in the local land planning by-law can also be a time-consuming process for the owner, as typically consent must be obtained from a number of owners in the cluster development.

It’s clear that defunct HOAs may cause delays in transfers. And it’s therefore advisable that should an HOA become defunct, the members re-establish it and appoint a member or members as trustees to assist with the signing of the consents required in terms of the title deed. In this instance, the assistance of an attorney or auditor may be needed to record or rectify any omissions or errors at the Companies and Intellectual Property Commission. 

Want more Snymans Articles? Sign up for our monthly newsletter.

Follow Snymans on Facebook for more legal information, tips and news about property.