Fines and penalties in estates in South Africa – what you should know

South Africans building in an estate must ensure construction remains on track or face costly fines.

Legal firm Wright Rose-Innes has noted a spike in clients who have received a large penalty on their monthly levy account from their corporate body or homeowner’s association for not starting/completing the building of a property on their estate’s land.

Customers regularly ask if the penalty is enforceable, the firm said.

Wright Rose-Innes said that estates – whether sectional title schemes or homeowners’ associations – have rules and regulations that govern the functioning of the estate and are intended to give a fair living environment for everyone living in the estate.

Levies are also payable and are applied to the operation, management and maintenance of the estate.

However, estates cannot make up rules when it suits them. The estate’s rules must be included in the management rules of a body corporate or the constitution of a homeowners association.

The rules of the estate must also provide reasons why penalties for an owner failing to build or complete their home in a specified timeframe were imposed.

According to Wright Rose-Innes, penalties could triple the existing monthly levy payable by the owner and are usually recurring until the owner satisfies the complaint by commencing or completing the building process.

The fines are not for financial gain and are usually used to ensure that members of the estate comply with the rules of the estate, which would usually want owners to build properties in a set period so that the estate can be developed.

This prevents properties from laying undeveloped for years, resulting in construction never being finished in the estate, affecting its aesthetic appeal.

But are the penalties enforceable?

South Africa’s courts often consider the imposition of such penalties and have often found them to be justifiable as they are meant to punish those who fail to commence construction on time, ensuring compliance with the estate’s rules.

Wright Rose-Innes said that if the fines were not substantial, it could lead to further non-compliance on the part of owners, as they can simply pay for the delay.

Harsh penalties have the desired effect as they make members comply with the rules of the estate or face further pricey penalties.

Ultimately, these penalties are enforceable, but they must form part of the estate’s set rules that must remain fair and reasonable.

Read: What the law says about selling a home with defects in South Africa