{"id":10390,"date":"2025-01-28T08:52:09","date_gmt":"2025-01-28T06:52:09","guid":{"rendered":"https:\/\/dotnewsconnect.co.za\/law\/?p=10390"},"modified":"2025-01-28T08:54:57","modified_gmt":"2025-01-28T06:54:57","slug":"a-complex-issue-beware-late-building-penalties","status":"publish","type":"post","link":"https:\/\/dotnewsconnect.co.za\/law\/2025\/a-complex-issue-beware-late-building-penalties\/","title":{"rendered":"A Complex Issue: Beware Late Building Penalties"},"content":{"rendered":"\n
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\u201cHome wasn’t built in a day.\u201d (Jane Ace, radio comedian)<\/p>\n<\/blockquote>\n\n\n\n

You find the perfect plot on which to build your dream home in a security estate. Your offer is accepted and transfer proceeds \u2013 happy days!

So, imagine your distress when, having proudly taken ownership, you are suddenly told by the HOA (Homeowners\u2019 Association) that you are liable for penalty levies because the previous owner didn\u2019t build on the plot within the deadline period set out in the HOA\u2019s constitution.<\/p>\n\n\n\n

You ask the HOA for an extension \u2013 after all, it was the seller who was in default, not you. And besides, no one said anything to you about the problem until now. Most importantly, even with the best will in the world (and the best architect and builder!) it will take you many months to get plans approved and start laying foundations. The last thing you need now is the crippling financial burden of unforeseen penalty levies.\u00a0\u00a0

The HOA is unsympathetic. \u201cYou should have checked before buying,\u201d they say. \u201cThe seller and the agent should have told you all about it \u2013 take it up with them.\u201d<\/p>\n\n\n\n

Can that really be correct?<\/p>\n\n\n\n

A recent High Court decision addresses exactly that situation. All HOAs, owners and buyers need to understand the ramifications of the Court\u2019s findings.<\/p>\n\n\n\n

\u201cYou owe R190k in penalty levies and interest. Pay up!\u201d<\/h6>\n\n\n\n

The scene is an upmarket security estate in Midrand, managed by a HOA.\u00a0<\/p>\n\n\n\n

In terms of the HOA\u2019s constitution, construction of a house has to start within 18 months of the land first being sold, and be completed within 30 months. Fail to meet this deadline and the landowner is liable for penalty levies of twice the normal levy plus the normal levy. That\u2019s\u00a0triple levies<\/strong>\u00a0\u2013 payable until completion. Critically, the constitution also specifies that \u201csuccessors in title\u201d (i.e. buyers of vacant plots from existing owners) fall squarely into this net.<\/p>\n\n\n\n

Our buyer, as soon as she became aware of these hefty penalty rates, challenged them with the HOA on the basis that \u2013 as she had just bought the property and was awaiting approval of building plans \u2013 it was physically impossible to expect her to start building immediately after taking transfer. Therefore, she said, it would have been reasonable to give her the same time periods as the previous owners before charging penalties. In any case she could not be held liable for the previous owner\u2019s failure to build.\u00a0<\/p>\n\n\n\n

The HOA declined to offer her any relief, and the dispute went before the CSOS (Community Schemes Ombud Service), with the buyer asking for an order that \u201cthe unreasonable and therefore incorrect imposed fines\/penalties be rescinded\u201d. The CSOS ruled the penalties to be invalid because the HOA had not followed fair procedure in imposing them, and the High Court confirmed this decision on appeal.<\/p>\n\n\n\n

The details of the dispute are highly technical and will be of little practical import to anyone but lawyers. But what are highly relevant to all HOAs, owners and buyers are the Court\u2019s findings that:<\/p>\n\n\n\n