BEFORE YOU BUY INTO AN ESTATE....

When you buy into an estate, your property's future value will be affected by how well the whole development is managed. So, how good is the Homeowner's Association, and how to find that out?

As we all know, gated estates offer a lifestyle which is appealing to many. Most South Africans still enjoy freestanding homes, but with the mushrooming of gated estates in Kwazulu-Natal, it's clear there's solid demand. BusinessTech's recent poll of 4,000 respondents revealed that 1,500 live in gated communities. New estates from the Midlands to the South and North Coasts, are focusing strongly on lifestyle, and while security is always a powerful drawcard, communal facilities like clubhouses, sports facilities and walking/biking/birding trails in green surrounds are increasingly appealing.

The global switch to working from home - combined with supportive technology - means families spend time previously used for endless commutes, on leisure activities on the estates. Economies of scale are achieved too, when costs such as security, landscaping, maintenance, and infrastructure improvements are shared.

Living on an estate often takes an adjustment. A home in a gated estate is run by a Homeowner's Association (HOA). If you've been used to only abiding by municipal rules as opposed to the rules and role of a HOA, the positives of communal living for some can also prove to be the negative. The focus here is more on consideration for neighbours and the greater good of all. It's important to have the full picture of how an estate or complex is run, and to make sure you're able to live within those parameters.

Your estate's HOA has a set of rules, unique to your estate, to which you have to agree before you purchase there. But also, importantly, the future value of your property will be affected by how well the development is managed by that HOA. Each homeowner pays a monthly levy, which usually covers security, landscaping/gardening, homeowners' insurance, other specified services...and future expenses.

Examining the HOA's set of rules is important before you buy, and there are certain things to look out for. There is much advice out there as to what to ask, but bottom line, get as much information as possible.

The Memorandum of Incorporation (MOI) - otherwise called the HOA's constitution - sets out all its duties and responsibilities with regard to collecting levies and to managing both the finances and the physical environment of the estate.

It's not a bad idea to have a list of the current HOA directors and their roles - then you know who to approach with specific problems - say, security or property maintenance.

• Ask for a copy of the latest audited financials, which will show how well the community's finances are being managed

• Does the HOA have a reserve fund for long-term, planned maintenance or emergencies? If they don't think long-term, you could be in for unexpected special levies when a crisis hits. In addition, it is not uncommon for there to be resistance by homeowners to a special levy, which doesn't bode well. You want a HOA which provides for future maintenance. A general rule of thumb is that the HOA should have more than 75 percent of the reserves it needs in the bank. Lower than that, and it raises concerns about work which needs to be done to sustain property values.

• Are there any restrictions on how homes in the estate may be used? Some don't allow any businesses to be run from a home, while others discourage owners from renting out their properties (and require prospective tenants to be pre-approved).

• Ask for copies of the minutes of last year's AGM.

• Check to see if there is a HOA insurance policy to cover communal parts of the estate and that premiums are up to date.

A well-run Homeowner's Association is a true asset to an estate - make sure when you buy, that yours is. And rather than thinking it's somebody else's job, do consider getting involved and playing your part.