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February 20, 2015

An HOA can lawfully limit/refuse an owner to purchase pre-paid water and electricity vouchers.

In an earlier post, I mentioned that no-one but a municipality could switch off a defaulting owner’s electricity, and that if a landlord did so, the tenant could bring a spoliation application, forcing the landlord to restore the service.

What happens if the rules of a Homeowners Association (‘the HOA’) provide that the HOA can deny services to an owner that is in breach of its rules? The question is whether a party can contractually agree to forfeit certain rights to his property.

The court had to determine that in the case of Van Rooyen v Hillandale Homeowners Association (1603/2014) [2014] ZAFSHC 226 (11 December 2014).

An owner (van Rooyen) failed to pay certain penalties relating to the latter’s failure to adhere to the HOA’s aesthetical rules. As a result, the HOA limited the owner’s electrical supply. Van Rooyen approached the court in terms of the mandament van spolie for an order restoring his access to and use of electricity.

The court found that the actions of the HOA didn’t amount to spoliation:

I am satisfied that the trust’s failure to adhere to the aesthetical rules triggered the imposition of penalties which remained unpaid. The rules and the contract entered into between the trust and the respondent, are binding on the applicant. The respondent was entitled or had the power to refuse to sell applicant prepaid water and electricity vouchers, or to limit the number of units to be sold to applicant. Respondent’s conduct was therefore not unlawful as it acted within the rules and the agreement it entered into with the trust. The conduct of the respondent did therefore not amount to spoliation’.

The court stated further that:

‘It is trite that parties are free to contract as they please. The law permits perfect freedom of contract. Parties are left to make their own agreements, and whatever the agreements are, the law will enforce them provided they contain nothing illegal or immoral or against public policy’. 

On this basis, it could be argued that a tenant can contractually agree to forfeit certain rights to his property, in a lease, or an owner of a sectional title unit can be bound by restrictive Conduct Rules.