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Total deviation

19 May 2011

I think that the discussion regarding the above now seems to have deviated totally from the original question. The latest response from Dudley Lee (Three aspects response goes down another road altogether. The question as to whether the arrears are preferent or concurrent is not really at issue. To the best of my knowledge there has already been a High Court judgment in this respect and I am of the opinion that where a body corporate, in a sectional title scheme, which body corporate has been established by law, is involved, the matter is certainly different to where an HOA is involved. I have yet to come across an HOA that is established in terms of a Law.

The question is as to whether the Registrar's conference was correct in issuing the original resolution and then whether the Chief Registrar was correct in withdrawing that resolution. I think it is important to consider the reason for such a condition, requiring a consent, being inserted in the title deed. Such a condition is inserted either at the instance of the developer or as a condition for the approval of the subdivision by the local authority. The reason for such a condition is to ensure that the complex itself will be properly regulated and maintained. The only way that the HOA can claim contributions from owners is on a contractual basis and this is established by insisting upon a contract being entered into before a certificate is issued and therefore before transfer is registered. If transfer is registered without such a certificate, the HOA would find it very difficult to recover future levies from an owner and would not be able to finance the maintenance of the complex. This would lead to a reduction in the values of properties in the complex and would also lead to financial institutions refusing to grant loans for the purchase of properties in such a complex. One can to some extent use the analogy of the supply of services by the local authority to an owner of a property. The local authority insists that the owner pays a deposit and signs a contract, before the local authority supplies services. The same applies with the HOA.

I am of the opinion that if the Registrar allows the transfer to proceed without such a certificate, and the HOA suffers a loss as a result, the HOA may have a claim for damages against the Registrar. The damages would not relate to outstanding amounts prior to transfer but would relate to loss of income to the HOA after transfer. It is even possible that owners could claim damages from the Registrar if they felt that the value of their property had been reduced as a result of the failure of the Registrar to insist upon a certificate in terms of the condition in the title deed.

There is no doubt whatsoever in my mind that the Chief Registrar was correct in withdrawing the conference resolution.

Kevin Mahon
Attorney, Notary and Conveyancer
JB HUGO & CRONJE INC
kevinmahon@hugocronje.co.za







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