Understanding the authority of CSOS regarding HOA governance documentation

By Auren Freitas dos Santos

As we mark the seventh anniversary of the Community Schemes Ombud Service Act (CSOS Act), there continues to be widespread confusion regarding the extent of the CSOS’s authority in controlling, regulating, and monitoring the governance documentation of Home Owners Associations (HOAs).

Many of our clients and readers associated with HOAs still labour under the misconception that the CSOS must approve their constitutions, memorandums of association, and rules. This is not the case.

Section 4(1)(c) of the CSOS Act explicitly outlines the CSOS’s mandate, stating that it “must regulate, monitor, and control the quality of all sectional titles scheme governance documentation and such other scheme governance documentation as may be determined by the Minister by notice in the Gazette.”

As of the date of this article, the Minister has not issued any notice granting the CSOS jurisdiction over the governance documentation of HOAs or any other community scheme that falls outside the category of sectional title schemes. Consequently, the CSOS’s authority to regulate, monitor, and control the quality of governance documentation exclusively applies to sectional title schemes and does not extend to HOAs or other forms of community schemes.

This means that, unlike sectional title schemes, HOAs are not obliged to seek CSOS approval for any amendments made to their governance documentation.

However, it is important to recognise that the CSOS does possess some authority concerning the content of an HOA’s governance documentation. Section 39(3) of the CSOS Act empowers CSOS adjudicators to issue specific orders related to the governance documentation of any community scheme, including HOAs.

Under this section, the CSOS can make the following orders regarding the content of an HOA’s Memorandum of Incorporation (MOI) or Constitution:

1. An order requiring the HOA to record a new scheme governance provision consistent with a provision approved by the association;
2. An order requiring the HOA to approve and record a new scheme governance provision.
3. An order declaring that a scheme governance provision is invalid and requiring the HOA to approve and record a new scheme governance provision to remove the invalid provision; and
4. An order declaring that a scheme governance provision, having regard to the interests of all owners and occupiers in the community scheme, is unreasonable, and requiring the HOA to approve and record a new scheme governance provision  to either amend or remove the provision, revert to a previous provision, or replace it with a new one.

Therefore, while the CSOS is not responsible for reviewing or endorsing the content of an MOI or constitution submitted during an HOA’s registration process or following an amendment, it does have the authority to assess the validity of the content of these documents in the context of a dispute referred to the CSOS for resolution.

Should you have any questions in this regard, or wish to discuss the reasonableness of your HOA’s governance documentation with a specialist community schemes attorney, contact us at info@theadvisory.co.za for a no-obligation quote.

Specialist Community Scheme Attorney (LLB, LLM), Auren Freitas dos Santos, is a Director of The Advisory, a boutique consultancy specialising exclusively in community schemes law.

Contact him at www.theadvisory.co.za or email info@theadvisory.co.za for assistance with any matters relating to sectional title meetings.