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CaseLaw, Attorney
Category: South Africa Law
Satisfied Customers: 1538
Experience:  BCom; LLB; Masters in Law
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My house on the Clanwilliam dam hasbeen expropriated along

Customer Question

My house on the Clanwilliam dam hasbeen expropriated along with about 20 others. Only 10 or so houses will remain. The HOA have cash in the bank of approx R350 000 and will receive R2.2 million for the security house which all owners have contributed to, in the form of special levies when it was built. To me it seems faie that the HOA should dissolve/disband and distribute the assets fairly between all 30 home-owners. Remaining home -owners should then restart their own HOA with their own funds. However, existing HOA wants to build or buy a new securty house with the funds to serve the needs of the remaining 10. What is fair and legal in this case? And what legislation applies?
Kind regards
Joan Kleynhans
Submitted: 2 years ago.
Category: South Africa Law
Expert:  CaseLaw replied 2 years ago.
Hi there Joan and thank you for your question,
I'm afraid that you're not going to like my answer, but I'm going to give it to you anyway. Please don't rate me negatively as a result thereof.
First, a HOA is a separate legal entity which has its own rights, and is capable of suing or being sued. The HOA can enter into agreements in its own name, can have a constitution binding its members, can open banking accounts in its own name, and can be wound up by special resolution or court order.
The assets of a HOA do not belong to the members.
Only when a HOA is dissolved do the members receive a dividend (share) of the proceeds remaining from the HOA.
On the facts, the HOA is not being wound up, but you think that it would be fair if it was to be wound up so it could distribute the funds.
There is no legislation that deals with your situation. There is legislation in general that deals with HOAs, and their powers, constitutions, etc ... but not in relation to when/if a HOA should be wound up.
Normally the HOA is made up of members who own houses in a certain area. If a member sells his house, then the new owner automatically becomes a member of the HOA. Typically therefore, it is NOT common that a HOA is wound up! Only really in cases where the HOA is insolvent does it get wound up.
Legally, I am of the opinion that there is no legislation that will assist you, or even case law. I also can't find any common law on the point.
Speaking to what is fair, I don't think that what you're proposing is actually fair. If the current HOA has a security house, which is going to be expropriated, and the HOA will receive money for that, and the HOA needs to build a new house, then why shouldn't the HOA be entitled to use that money for the construction? I am of the opinion that it can.
I don't see any reason/way to compel the HOA to distribute the funds to existing members, unless you can pass a special resolution. Perhaps that is your best bet. i.e. ensure that you have 75% voting rights in total, and then vote to pay out the existing members? On the face of it it looks like you only have 66%. i.e. 20 houses voting yes out of 30 in total.
My advice is to make some noise to the HOA committee, but stop before launching legal proceedings!
If there is something more specific that you need clarity on, please continue in this same thread. Let me know if you need more advice!
I hope you found my answer helpful. If you did, PLEASE rate my answer & please leave me positive feedback!
Good luck and best regards,
Please note: This answer does not create an attorney-client relationship. Please consult a local attorney in person for legal advice. This information is being provided so you can better discuss legal matters with your attorney.
Expert:  CaseLaw replied 2 years ago.
Hi there again,
I hope that you understood the above advice and that it was useful? Please leave positive feedback for me.
If you have a further question please ask it?