They are both property owners’ associations incorporated under Section 21 of the Companies Act.
Large property developments such as Century City can be organised under a single, overarching management body, or property owners’ association, that has subsidiary schemes that cater for a variety of development needs. These could be commercial, residential, leisure and retirement. The different subsidiary schemes are most commonly other property or home owners’ associations and sectional title schemes, whichever is most suitable for the intended use. For example, the subsidiary schemes could be one or more home owners’ associations of freestanding homes in a secured area, cluster housing in a sectional title scheme, or retail and commercial nodes which are sectional title schemes or freehold properties on separate erven in the master development, as is common with shopping malls.
This development methodology is, of course, extremely complicated but has the major advantage of allowing each different scheme to manage itself. The system is, practically speaking, a delegation of management functions to the entities most interested in and most qualified to manage the individual schemes. The governance documentation of each scheme, as well as making all the necessary provisions for the management of that scheme, details its obligations to the overarching or master scheme. One of the conditions of title will be the obligation that the scheme be a member of the master association. The subsidiary schemes levy their members to cover their own costs and the schemes in turn make their own contributions to the running costs of the overarching body. There are almost always other responsibilities to the master association as well, such as compliance with appearance, architectural, landscaping and use requirements.
The arrangement of responsibilities and obligations should be reciprocal, ensuring that the best interests of all in the development are promoted.
Anton Kelly is one of the Course Conveners of the Paddocks Home Owners’ Association Management course. The next course starts 21 February 2011.