Home Owners Associations Conduct Rules and Short-Term Letting

Category Advice

Home Owners Associations Conduct Rules and Short-Term Letting

We highlight an interesting case which appeared before the Ombud with an Order made in terms of Section 54(1)(a) and (4) of the Community Schemes Ombud Service (CSOS) Act 9 of 2011 on 6 December 2017.

Summary of dispute:

At the 2016 AGM, a new Conduct Rule was introduced and adopted by majority vote restricting short-term letting in the complex to a minimum of three months. The applicants contest that this restriction unfairly prejudices them, infringes on their constitutional rights and that the HOA Conduct Rules contradict the Constitution of the association in this regard.

Applicant’s version (summarized):

  • Applicant says that she bought a townhouse in order to generate income from the property with permission from the previous chairperson.
  • The Constitution states “to let any accommodation on the common property by means of a lease of not longer than 12 (twelve) months”.
  • A new Conduct Rule was introduced at the 2016 AGM stating that “no lease for rentals being shorter than a three month period, and that no B & B or Airbnb type of operations where allowed”.
  • Applicant contests that the Deed of Sale, as registered, states that “this erf shall be used for such purposes as are permitted by the Town Planning Scheme”. Therefore the Deed of Sale and Constitution only prohibits the leasing of the property for longer than a year and that no minimum period is provided for.
  • Applicant also contested that they do not run a business from home as renting out of the property does not constitute running a business.
  • Applicant also argues that they have not received any complaints relating to them in respect of having tenants in the complex.

The applicant sought relief and asked CSOS to order the HOA to revoke the motion passed at the 2016 AGM and that CSOS order the HOA to call a special general meeting to vote on changing the Constitution.

Respondents’ version (summarized):

  • Fears that the complex may change from quiet and secure to a holiday resort.
  • Fears that the presence of holiday-makers will have a serious impact on security as access is gained via remote control and there is no permanent guard on the gate.
  • Respondents sought various legal opinions with respect to the interpretation of the Constitution in respect of the Constitution having to be amended to enforce the new Conduct Rule which opinion stated “there is nothing irreconcilable between the provisions of the Constitution and the Conduct Rules and the argument that there is “irreconcilability” will likely not succeed in Court”.
  • Respondents contest that the HOA has done their best to be fair to all and to achieve a reasonable compromise.
  • Respondents also contended that the HOA is a member of the Association of Residential Communities (ARC) who confirmed that at least 15 of their affiliated members don’t allow rentals for less than a 30 day period.

Conclusion (Order – summarized):

The Advocate presiding quoted various case studies and took all expert evidence and submission into consideration to conclude that the newly adopted Conduct Rule seems reasonable in the circumstances and must be equally applied to all owners, in turn making this an Order in terms of Section 54 (1)(a) and (4) of the Community Schemes Ombud Act No 9 of 2011, which needed to be applied within 60 days.

Author: Colin Fisher

Submitted 06 Jun 18 / Views 834