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Home Businesses in HOA and Sectional Title

All Home Owners Associations (“HOAs”) and their home owner members should be aware of a recent High Court judgment addressing the knotty problem of a HOA’s powers to bar an owner from running a home-based business.

The Case: Municipal Zoning v HOA Rules

  • A home owner had for many years conducted a home business in the form of a hair salon from her house.
  • The HOA’s constitution and its conduct rules prohibited use of homes for anything other than residential purposes, unless authorised to do so by special resolution.
  • The HOA, after the home owner breached a written undertaking to cease business, applied to the High Court to interdict her from continuing.
  • The home owner’s main argument was that her home business was permitted by the local zoning regulations, which did indeed permit certain small scale non-residential activities.  The HOA, she argued, had no right to override these zoning scheme provisions by prohibiting all non-residential use.
  • The original Court found for the home owner, but on appeal to a “Full Bench” of the Court, the interdict was granted.  The Court held that “…..there is nothing contained in our law which prevents a property owner from agreeing to a limitation of its rights…..” and the individual home owners had, by agreement, forfeited their right to use their land for anything but residential purposes.  Moreover the HOA had not purported to change the zoning scheme and was “well within its rights to seek to preserve the residential character of the development”.
  • The home owner was accordingly interdicted from continuing with her hair salon business and, to rub salt into her wounds, must pay the HOA’s costs on the attorney and client scale.

In a nutshell 

Home Owners Associations: Check your constitution and conduct rules to ensure that you have adequate powers to preserve the residential character of your development.  Take advice in doubt!

Home Owners:  If you want to run a home business, check both the local zoning regulations and your HOA’s constitution and conduct rules before you open your doors.  Again, take advice in doubt!

 

With Sectional Title schemes it is more straightforward

The Act states the following – (you need to first check if your Management Rules have been amended or if the Prescribed Management Rules apply)

Prescribed Management Rule 68. (1) In addition to his obligations in terms of section 44 of the Act, an owner-

(i) shall not use his section, exclusive use area or any part of the common property, or permit it to be used, in such a manner or for such purpose as shall be injurious to the reputation of the building;

(ii) shall not contravene, or permit the contravention, of any law, by-law, ordinance, proclamation or statutory regulation, or the conditions of any licence, relating to or affecting the occupation of the building or the common property, or the carrying on of business in the building, or so contravene or permit the contravention of the conditions of title applicable to his section or any other section or to his exclusive use area or any other exclusive use area;

(v) shall, when the purpose for which a section and exclusive use area is intended to be used, –

a) is shown expressly or by implication on a registered sectional plan;

b) is shown expressly or by implication on the original approved building plan thereof;

c) can be inferred from the provisions of the rules; or

d) is obvious from its construction, layout and available amenities,

not use, nor permit such section or exclusive use area to be used, for any other purpose; Provided that with the written consent of all owners such section or exclusive use area may be used for another purpose

So you would need the written consent of all owners to run a business from your unit in a sectional title scheme.

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