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Using common sense when interpreting HOA rules

14 Jan 2016

HOA rules are often lengthy, onerous documents to wade through, but they still cannot accommodate all eventualities in a gated estate or housing scheme.

“It has to be remembered that rules are there for a reason, and they are generally what has attracted someone to buy into that particular scheme. If each owner applies the rules as they interpret them, the concept of estate living where each unit should complement the scheme and the other homes, is compromised,” says Hulbert.

This is according to Shan Hulbert, sales manager of Knight Frank Residential SA, who says what should often be a direct application of a rule can become a quagmire of interpretations, but common sense should also prevail. 

A typical example is a case mentioned in a Smith Tabata Buchanan Boyes Property Law Update recently, where the rules did not specify provisions regarding the colours of exterior paints that were allowed within the estate.

In this particular case, although it seemed an odd choice, the owners painted lime green stripes on the exterior walls of their home, and the HOA applied for an order to have them remove the stripes.

The owners felt they were allowed to do this as they could see no rule that stated in so many words that the unit holders had to obtain approval for the exterior colour scheme.

However, the HOA Memo of Incorporation (MOI), as in many other HOA schemes, prescribed guidelines applicable to improvements, addressed the approvals necessary for any building operation and stipulated that they must comply with the set architectural guidelines. In this particular case the guidelines stated that “all external finishes and colours should be specified and colour samples may be requested”.

The MOI further provided for aesthetic controls and empowered the HOA to employ an architect to control design matters, including “the specifications, materials and finishes to be used in such erection as well as all matters incidental thereto”.

While there was no list of specified colours and finishes in this case, Hulbert says the controversy is in the interpretation of the rules (by the owners) and the power given to the HOA to determine paint colours or finishes used on the houses.

The court held in the HOA’s favour, as the owners in gated schemes agree to abide by the house rules when they buy into them and there were architectural guidelines set in place in this case, as well as a clause stipulating that the HOA could vet colours and finishes, says Hulbert.

“It has to be remembered that rules are there for a reason, and they are generally what has attracted someone to buy into that particular scheme. If each owner applies the rules as they interpret them, the concept of estate living where each unit should complement the scheme and the other homes, is compromised,” says Hulbert.

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