Make sure you know where your levies go

Property owners in estates and cluster complexes should ensure that they get good value for their monthly levies - by ensuring that their homeowners' association (HOA) has a proper constitution.

So says Berry Everitt, CEO of the Chas Everitt International property group, who notes that levies collected each month are intended for the upkeep of communal property such as gardens, recreation facilities, fences and security systems, and should be managed by an HOA set up by all the owners in that particular gated community.

"HOAs are non-profit companies usually put in place when a new development is handed over to the new owners, who then elect a board of directors or a management committee to implement their HOA constitution," he explains.

"And typically, such a constitution should provide for the HOA to manage, operate and maintain common areas and facilities, and for the directors to draw up annual budgets for necessary expenditure as well as financial statements so that any member can see what the levies need to be and how they are being disbursed."

Writing in the Property Signposts newsletter, Everitt says the constitution should also contain a provision that major decisions likely to materially affect owners will be put to a vote and only carried if a majority of owners support them.

Examples of such issues include the introduction of new policies such as no pets being allowed; restrictions being placed on the rental of units; and the employment of outside contractors or a property manager.

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