Does the CSOS have a say over the content of your HOA’s constitution or MOI?

By: Ané de Klerk

Section 4 of the CSOS Act, 9 of 2011 (“the Act”) makes it clear that the Community
Schemes Ombud Service (“CSOS’) has a great deal of power and responsibility
when it comes to sectional title scheme governance documentation, including its
conduct and management rules. The CSOS’s functions include:

1. Taking custody of body corporate rules
2. Regulating the quality of body corporate rules
3. Preserving body corporate rules
4. Controlling the quality of body corporate rules
5. Providing access to body corporate rules
6. Monitoring the quality of body corporate rules

In terms of the regulations under the Act, Homeowners Associations
(“HOA’s”) must furnish their governance documentation to the CSOS as
part of their CSOS registration process, and they must communicate any
amendment to their governance documentation to the CSOS by submitting
form CS A1, but does the CSOS also have the power to preserve, control,
regulate and monitor the rules contained in, or made in terms of, an HOA’s
Memorandum of Incorporation (“MOI”) or Constitution?

Sections 4(1)(c) and (d) of the Act refer to “sectional title scheme governance
documentation and such other scheme governance documents as may be
determined by the Minister by notice in the Gazette”. To date, the Minister
has not given notice that the CSOS has jurisdiction over the governance
documentation of HOAs, retirement developments or any other type of
community scheme that is not a sectional title scheme. This means that the
six CSOS functions listed above only apply to sectional title schemes and do
not apply to HOAs or any other types of community schemes.

This does not mean that the CSOS is completely powerless when it comes
to the content of an HOA’s governance documentation. In terms of section
39(3) of the Act, a CSOS adjudicator has the power to issue certain orders
pertaining to any community scheme’s governance documentation.

From this section, it is clear that the CSOS has the power to make the following
orders with regard to the content of an HOA’s MOI or Constitution:

1. An order requiring the HOA to record a new provision consistent with a provision
previously approved by its members;
2. An order requiring the HOA to approve and record a new provision;
3. An order declaring that a provision is invalid and requiring the HOA to approve and
record a new provision to replace the invalid one;
4. An order declaring that a provision is unreasonable when taking into account the
interests of all owners and occupiers in that HOA and requiring the HOA to remove
or amend the provision; to restore an earlier provision or to substitute a new provision.

Therefore, while the CSOS does not have a duty to review or approve the
content of any MOI and/or constitution submitted to it as part of a HOA’s
registration process or following an amendment thereof, it does have the
power to judge the validity of the content of these documents in the context
of a dispute referred to the CSOS for resolution.

If you suspect that any provision in your HOA’s MOI or constitution may
be invalid, unreasonable or unfairly prejudicial to you, and you want the
provision removed or replaced, don’t hesitate to submit an application to your
local CSOS office in terms of section 39(3) of the Act. This will enable a CSOS
adjudicator to consider the reasonableness of that provision and to address
the issue by making a binding decision.

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, send an email to consulting@paddocks. 

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