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Attention Homeowners Associations


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One of the transitional arrangements of the 2008 Companies Act (the Act) was that businesses had two years to migrate from their constitutional documents (‘Memorandum and Articles of Association’ for a company) to the new MOI. If you haven’t yet completed this exercise, there are good reasons why you should now consider your MOI without delay:

• The Act differs from the previous Companies Act and understanding these differences and the impact they may have on your Association is a time consuming exercise
• During the two year transitional period your Memorandum and Articles of Association will take precedence over the Act (subject to certain transactions such as a take-over or duties of directors) but from 1 May 2013, if parts of your Memorandum and Articles of Association conflict with the Act, these parts will be void

Check your old Memorandum and Articles of Association to see if any specific clauses were inserted. If so and if they are still relevant you may choose to include them in your MOI (provided they do not clash with the Act).

Alterable provisions come into play and there are more than forty of them in the Act. These may be curbed or removed by the Association when drafting the MOI. Typically, alterable provisions give wide powers to directors to, for example, issue shares or take on business debt.

There are other issues to take into account, so it is worth getting expert advice – there is plenty at stake.

Remember the deadline for completing your MOI is looming. As an extra incentive if you miss the deadline of 30 April 2013, you will have to pay the Companies and Intellectual Property Commission (CIPC) a fee when submitting your MOI – there is no CIPC charge until then.

From CA(SA)Dotnews





1 thought on “Attention Homeowners Associations”

  1. Q&A on HOAs – please explain the system of HOA NPC

    the law on homeowner associations NPC is now applicable. The bill requires HOA NPC s to register with the government, and will hopefully provide an online site with the Department Land Affairs , where residents of communities (HOA NPC) can file complaints.

    some questions regarding HOAs

    IREN: Have you heard horror stories from HOAs and residents of HOA-communities being hurt because of the record number of disputes in recent years? If so, do you think anything can be done to address this problem?

    Carroll: Definitely. Disputes are increasing. While liens are not an unusual way ensure debt collectors get paid it is unusual Colorado could change that law, but given that it was in an earlier version

    IREN: Tell us about the new bill which requires HOAs to be registered with new MOI. What is the intent of it? Is it mostly just to get a handle on the number of HOAs in and create a database?

    Carroll: I happen to like it because I authored it. The intent is so we know how many HOAs we have, can get free information out to homeowners and HOAs about FAQ on rights and responsibilities so people don’t have to go to court or spend a lot of many to get good, basic information.

    It is also important to create the database to track complaints so people can ascertain the breadth and scope of various problems. Are problems rare and isolated or commonplace? The data will tell.

    IREN: Along the same lines, do you see value in allowing people to file complaints with HOAs online through Land Affairs? So far, they have received hundreds complaints, according to information I received this morning?

    Carroll: Clearly, it is both an important accountability mechanism for HOAs, but also a critical way to help evaluate our public policy in this arena to understand if we are dealing with just a few bad actors or a wide-scale problem.

    IREN: Do you think that HOA property managers ( managing agents ) should be licensed, much like real estate brokers?

    Carroll: I think it’s a good idea. But Land Affairs will determine at the first despite regulation. They should join NAMA.

    IREN: are there any other issues regarding HOAs that you would like to address?

    Carroll: I think people should have a right to basic information about their rights and responsibilities without have to litigate or spend money on attorneys to resolve these disputes. Access of Information is applicable.

    It is the basis not only for the information office I created, but also why I created an HOA mediation program through the judicial department.

    Most conflicts can be avoided when HOA board members follow their own rules and realize that they are elected officials that need to serve their homeowner constituencies well and when homeowners read their covenants, declarations and bylaws and pay their dues on time. – by AniJ

    Section 33 of our national Constitution determines that everyone is entitled to administrative treatment which is lawful, reasonable, and conducted by means of fair procedures. Any person whose rights are harmed by such administrative action has a right to be furnished with written reasons.
    Furthermore the Constitution requires that legislation be enacted to lend expression to the above basic constitutional right. In pursuance of this requirement,See the Promotion of Administrative Justice Act (PAJA). This should not be confused with the Promotion of Access to Information Act (PAIA), which also has significant relevance to sectional title administration..
    PAJA – It is clearly stated in section 1 of the Act that it also applies to natural persons and bodies corporate in general. This means that all members of the private sector are also bound by PAJA.
    Accordingly the provisions of PAJA are also relevant in respect of all decisions made by trustees of a sectional title body corporate and by the body corporate itself at a general meeting, in as far as it may affect the rights of a member of such body corporate.
    Importantly, PAJA does not only relate to decisions actually made, but also to the failure to make decisions.
    In terms of section 3 every administrative action must be fair. This implies that –
    (a) sufficient notice of the proposed action must be given;
    (b) the proposed action must be clearly described;
    (c) a reasonable opportunity must be given to submit representations;
    (d) sufficient notice must be given of the right to any internal appeal mechanism which may be available; and
    (e) sufficient notice must be given of the right to request written reasons.
    If the rules of a sectional title body corporate which regulate certain actions already contain provisions for fair administrative procedure, such rules may be followed to the exclusion of PAJA.
    Please read PAJA – it overrides STA. put your problem
    You have a constitutional case, a CPA case, a PAJA case.

    In terms of section 5 of PAJA any person whose rights are affected substantially and negatively by administrative action, may within 90 days of becoming aware thereof, require to be furnished with written reasons. The body corporate then has a further 90 days to respond (by furnishing the reasons).
    Subsequently, an aggrieved person may then institute action in a court for review of the administrative action. At present such reviews are conducted only in High Courts but it is proposed that legislation be made to endow Magistrates Courts with the necessary jurisdiction to conduct reviews.
    An application for review must be launched within 180 days after receipt of the written reasons. This means that a person will lose his or her right to contest an administrative action after expiry of this period. This is particularly important in the sectional title environment where it often takes a long time before owners react to decisions.
    Upon review, a Court is empowered to declare a decision null and void and/or to refer the matter back for re-evaluation. In special circumstances a Court may even issue an amended decision itself. Where the unjust action consists of a failure to act, the Court may itself issue a fair decision and may then order the parties to act in accordance thereof.
    The Court is also empowered to issue a temporary interdict to stop any action subsequent to a decision which has been declared null and void.

    Ask for copies of trustees minutes and AGM chairman’s reports over the last 10 years – ask for any related decisions.

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