FILTERS:

HOA's barring business

24 April 2014

All Home Owners Associations (“HOAs”) and their home owner members should be aware of the recent High Court judgment of  Vanilla Street Home Owners Association v Ismail and Another (A345/2013) [2014] ZAWCHC 25 addressing the knotty problem of a HOA’s powers to bar an owner from running a home-based business.

The Case: Municipal Zoning v HOA Rules

  • A home owner in such a complex was bound (via both her purchase agreement and the title deeds) by a HOA’s constitution and conduct rules.

  • She had for many years conducted a home business in the form of a hair salon from her house.

  • The HOA’s constitution and its conduct rules prohibited use of homes for anything other than residential purposes, unless authorised to do so by special resolution.

  • The HOA, after the home owner breached a written undertaking to cease business, applied to the High Court to interdict her from continuing.

  • The home owner’s main argument was that her home business was permitted by the local zoning regulations, which did indeed permit certain small scale non-residential activities. The HOA, she argued, had no right to override these zoning scheme provisions by prohibiting all non-residential use.

  • The original Court found for the home owner, but on appeal to a “Full Bench” of the Court, the interdict was granted. The Court held that “…..there is nothing contained in our law which prevents a property owner from agreeing to a limitation of its rights…..” and the individual home owners had, by agreement, forfeited their right to use their land for anything but residential purposes. Moreover the HOA had not purported to change the zoning scheme and was “well within its rights to seek to preserve the residential character of the development”.

  • The home owner was accordingly interdicted from continuing with her hair salon business and, to rub salt into her wounds, must pay the HOA’s costs on the attorney and client scale.

In a nutshell

Home Owners Associations: Check your constitution and conduct rules to ensure that you have adequate powers to preserve the residential character of your development. Take advice in doubt!

Home Owners: If you want to run a home business, check both the local zoning regulations and your HOA’s constitution and conduct rules before you open your doors. Again, take advice in doubt!

For the sake of simplicity and brevity the above article does not address various other defences raised by the respondent and addressed in detail in the judgment.

Full judgment

Jack Crook (LLB Lond, LLB Rhod) is the author of LawDotNews, a monthly newsletter which is personalised and e-mailed to your firm's clients compliments of your firm. Readers are welcome to contact Jack, or visit his web site at http://www.dotnews.co.za for further details. ©LawDotNews

 

Reader Comments: 4
Anton Kilian 08/05/2014:

I have a client in a similar situation and used this to advise him, it saved him all the legal costs and time . Thank you for this service!

Paul.N 16/05/2014:

I think the Court that upheld the appeal in this instance erred.

Firstly, in the South African Constitution, Section 19 - clause/rule/law A, states "No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property." - the fact that the HOA's had such a clause in there constitution as a pre-condition to purchasing property is a violation of the above mentioned right in the Bill of Rights in the South African constitution.

Secondly, the HOA's lawyers tries to validate the HOA's constitution by arguing that if it was wrong then the City Of Cape Town should not have allowed it, whether the City identified the error in the HOA's constitution or not, it does not make the HOA's constitution legal.

Thirdly, following on the above, the HOA's lawyer mentions a bi-lateral mistake & a unilateral mistake, I put it to you that the bi-lateral mistake here falls on the side of the City & the HOA, in the Bill of Rights of the South African Constitution, under the Section 27 - "Just administrative action" clause A reads "Everyone has the right to administrative action that is lawful, reasonable and procedurally fair." the City made an administrative error in NOT recognizing the restrictive clause & when they passed the HOA's constitution they inadvertently violated the property owners right to just administrative action in that the City's decision to pass the HOA's constitution had an adverse determination on the rights of the said property owner & or other present or future property owners in the complex. Unilateral error, the appellant court should have recognized that the restrictive clause in the HOA's constitution was illegal, secondly, on that grounds the case should have been kicked because as a general principle in the courts, no Court of Law will lend its aid in enforcing an ILLEGAL contract. I think that if the respondent took this matter to the constitutional court, the judgement would be different.

Deena 23/05/2014:

Interesting article - I tend to agree with the Court - rules are rules. But with that said, a bit of "neighbourly charity" goes a long way too? If the hairdressing salon is not disturbing anyone or causing traffic problems - why be mean? Its her source of income. Too many people out there with issues and really should go about their daily lives focusing on bigger things in life. Whatever happens to this lady - maybe a single mother with children to feed and now no income? Well...let that be on the HOA's conscience....the wheel always turns....

adri blignault 24/02/2015:

What if there was no mention of membership to a HOA in her title deed and her sale agreement?Although development was approved with the condition to be a member of the HOA?

Submit your comment:
 
Name
EMail
Comments
Security Picture (click to change)
Word shown in picture: