The Importance of HOA and Levies Clearance Certificates in South African Property Transfers

In South Africa, when purchasing property within a sectional title or a community living scheme (e.g. which has a homeowners' association) where monthly levies apply, obtaining a Clearance Certificate from your Body Corporate (“BC”) or Home Owners Association (“HOA”) is a crucial step. This article will guide you through the importance of these certificates, what they entail, and why they are necessary for a smooth and legally compliant property transfer.

What is a BC or HOA Clearance Certificates?

A BC or HOA Clearance Certificate confirms that all dues and assessments charged by the Body Corporate or HOA have been paid in full by the seller up to the date of transfer. Similarly, a Levies Clearance Certificate applies to properties in sectional titles or estates, indicating that all monthly levies are settled. These certificates are essential to ensure that the new homeowner starts with a clean slate, free from previous debts.

The Role of These Certificates in Property Transfers

1. Financial Assurance: These certificates provide assurance to both the buyer and the lending institutions that there are no outstanding fees or dues that could later impact the buyer financially.

2. Legal Requirement: In many managed estates or complexes, the transfer of property cannot legally proceed without a current clearance certificate, safeguarding the financial health of the community or association.

3. Preventing Future Disputes: By clarifying and settling all dues before the transfer, future disputes between the buyer and the HOA or management company are minimized.

Obtaining the Certificates

The process of obtaining these certificates usually involves:

• The seller requesting the HOA or managing agent of the estate to issue a statement of account.

• The seller settling any outstanding amounts in full.

• The HOA or management agent issuing the clearance certificate, confirming all dues have been paid.

Challenges in Obtaining Clearance Certificates

• Timeliness: Delays in issuing clearance certificates can postpone the entire property transfer process.

• Discrepancies in Billing: Errors or arrears in the accounts may lead to disputes over the amounts owed, requiring resolution before the certificate can be issued.

• Administrative Overload: Inefficient administrative processes within some HOAs or management companies can further delay the issuance of these important documents.

Conclusion

HOA and Levies Clearance Certificates are integral to the property transfer process within managed estates and complexes in South Africa. Ensuring these are in order before proceeding with a property purchase is crucial for legal compliance and financial transparency. Law firms specializing in real estate should guide their clients through this process, ensuring that all financial obligations are met and the transfer process goes smoothly.

At Barter McKellar, we take pride in the expertise and diligence of our conveyancing team. Recognized for their meticulous attention to detail and profound understanding of property law, our conveyancers are committed to ensuring that every transaction is handled with the utmost precision and care. Whether you are buying or selling, you can trust our conveyancers to provide a seamless, secure and efficient service, exemplifying why we are regarded as a leading firm in this field.