Sectional Title vs HOA: Similarities and differences

Property in sectional title schemes and homeowners’ associations (HOA) are the two fastest growing homeowner sectors in South Africa. The need for security, urbanisation and smaller space living are some of the factors driving this trend.

Sectional title scheme

The Sectional Title Act (replaced by the Sectional Titles Schemes Management Act on 1 October 2016) governs the manner in which a sectional title scheme is managed and owned. In terms of the Act, an owner owns their section but also owns an undivided share of the common property in the scheme.

Levies in a sectional title scheme are higher than those in a HOA. This is mainly due to the fact that, in a sectional title scheme, the owners contribute to the maintenance of the common property. Levies are payable by all owners and are collectively allocated to the maintenance of the building and common property, as well as insurance cover.

Owners in a sectional title scheme may also own other areas within the scheme deemed common property. These areas are called exclusive use areas and remain common property within the scheme. The owner only has the exclusive right to utilise this area for the duration of their ownership.

In a sectional title scheme, the body corporate is responsible for the maintenance of the common property and each owner is responsible for the maintenance and upkeep of the inside of their unit.

In a sectional title scheme, the unit is indicated on a sectional title plan that is registered in the Deeds Office.

Homeowners’ Association (HOA)

A homeowners’ association is administered as a non-profit company and is governed by the Companies Act. Owners in a HOA own the erf as well as the house that is built on the erf by way of a Title Deed which is indicated on a plan like any other free standing house.

The maintenance and upkeep of a home in a HOA is the responsibility of the owner (not the body corporate, as is the case with a sectional title property). The HOA generally owns the roads and other common property in an association, and must maintain these areas. In some HOA`s the local municipality may be the owners of the roads and in this case, they are responsible for the maintenance.

In a HOA, the owners contribute to the maintenance of the roads, fence, security, gardening, etc. by way of their levies. An owner in a HOA is responsible for their own insurance, rates and taxes and any other maintenance or services they enjoy on his erf and inside their house.

Author: Leigh Maingard – MD Stonewood Properties
Stonewood Properties is a professional property management company that specialises in administrating community schemes such as sectional title bodies corporate, homeowners’ associations (HOA) and residential estates in Johannesburg and Cape Town.