The popularity of gated communities – and especially estates – hasgrown steadily over the past few years, thanks to the added security that they offer homeowners plus, in many cases, a complete live-work-and-play lifestyle incorporating sports and entertainment facilities, restaurants, wellness centres, schools and sometimes even shops and offices.

“And the widespread switch to remote working from home in the past two years has further boosted home demand in these communities,” says Gerhard Kotzé, MD of the RealNet estate agency group, “With many people realising that they can now spend whatever time they used to spend commuting to the office to make full use of their estate’s facilities instead.

The Difference Between Buying in a Suburb and a Gated Estate

“However, the shift in demand has also exposed an urgent need for buyers to better understand the major differences between buying a home in an ordinary suburb and a home in a gated estate that is run by a Homeowners’ Association (HOA) – the most important of which are that they will be required to pay a monthly levy and that that they will have to abide by the HOA’s constitution, its rules and its ongoing decisions.”

These levies and rules are different for every estate, despite the fact that most HOAs are Section 21 companies and broadly governed by the Companies Act, says Kotzé, so it is vital that before buyers make a decision to purchase in a particular estate, they know exactly what that HOA has been doing up to now, what its position is on certain vital issues and what state its finances are in.

To establish all this, prospective buyers should ask the sellers’ agent for copies of the following, and read them before signing any offer to purchase:

The Memorandum of Incorporation (MOI) or constitution of the HOA, which sets out all of its duties and responsibilities with regard to collecting levies and to managing both the finances and the physical environment of the estate;

The appearance and conduct rules of the estate, if these are separate from the MOI. It is particularly important to establish whether these rules contain any restrictions on how homes in the estate may be used. Some don’t allow any sort of business to be run from residents’ homes, for example, while others strongly discourage owners from renting out their properties and require prospective tenants to be pre-approved;

● A list of the current HOA directors and their roles, so that you would know who to approach if there was a particular problem – with security, for example, or with property maintenance;

● The minutes of the HOA meetings for at least the past year so you can confirm that there are no “hidden issues” in the estate or pending litigation which could lead to unplanned expenses for the HOA;

The current HOA budget, the year-to-date financial report on expenditure and the most recent levy collection record, which will together show how well the community’s finances are being managed; and

The current HOA insurance policy showing that the insurance on all communal parts of the estate is comprehensive and that the premiums are up to date.

“In addition, buyers should find out if the HOA has a reserve fund for long-term, planned maintenance as well as emergencies,” he says. “This is very important because a failure to plan for predictable long-range expenses often mirrors a lack of ongoing maintenance, and that can lead to falling property values or spiralling expenses.”

READ MORE: When can I cancel an Offer to Purchase?

Investing Off-plan

Meanwhile if you are contemplating a purchase in a new estate still under development, you should first check out the HOA’s architectural guidelines and building and appearance rules. “Many estates have minimum and maximum house size allowances, or a requirement that homes be built in a particular architectural style that may not be to your liking. Some estates also require that you build within a certain time after buying a stand.”

In addition, he says, those buying in a new estate should establish who will be responsible for security on the site once the first new owners have moved in – the developer or the fledgling HOA? Also, who will be responsible for repairing any damage to services such as internal roadways during the construction phase?

“There is clearly a lot to consider and a lot of information to digest before you make the decision to buy a home in an estate, but the process will always be easier if you deal with a reputable and registered estate agent who is able to access all the records you need, or from a recognized developer with a good track record.”

READ MORE: Big first-time homebuyer blunders and how to avoid them

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