- Courts are applying stricter scrutiny to everyday decisions by trustees and HOA directors, often years after the fact.
- Governance failures, not fraud, drive most disputes, and ignorance of the law is no longer a defence.
- Governance audits are emerging as a key preventative tool to reduce legal exposure and costly disputes.
Routine decisions by trustees and homeowners’ association directors, once seen as minor administrative tasks, are increasingly being found to be unlawful by South African courts.
What many boards previously viewed as internal matters is now tested against strict statutory and fiduciary standards, often with serious financial and legal consequences.
Attorney Johlene Wasserman, Director of Community Schemes and Compliance at VDM Incorporated, says this marks a pivotal change for bodies corporate and homeowners’ associations. Decisions once considered low risk now face exacting legal standards, exposing schemes to liability and placing trustees and directors at risk of personal accountability.
Wasserman, a governance specialist and former senior official at both the Community Schemes Ombud Service and the Property Practitioners Regulatory Authority, says the sector has entered a period of heightened legal vulnerability. Disputes are becoming more frequent and severe, often catching trustees and directors unprepared for the legal standards applied to their conduct.
“Many trustees and directors are being blindsided by risks they never realised existed in routine decision-making,” she says. “The pressure on community schemes has intensified, yet many disputes could have been avoided with sound governance.”
Most disputes stem from governance failures
Wasserman emphasises that most conflicts do not arise from fraud or bad faith, but from governance failures that go unnoticed for years before surfacing as costly disputes. Decisions taken without proper authority, flawed appointment processes, or informal practices that deviate from statutory requirements are now closely interrogated in court.
High Court judgments and ombud rulings show trustees and directors are now held to much higher standards of accountability. Courts examine whether decision-makers were lawfully appointed, whether decisions fell within their authority, whether fiduciary duties were breached, and whether governance structures comply with the Sectional Titles Schemes Management Act or governing documents.
This scrutiny reflects a broader legal shift. Trustees and directors are now judged not by intent or effort, but by whether their decisions were lawful. Ignorance of governance law is no longer a defence.
Reactive legal advice is too late
Many schemes only seek legal advice after a dispute escalates, such as when levy decisions are challenged or trustees face allegations of misconduct.
“By the time lawyers are involved, the focus shifts from prevention to damage control. This is the most expensive and stressful time to intervene,” Wasserman explains. She notes that most disputes are rooted in weak governance, not single contested decisions.
Wasserman advocates for governance risk auditing as a preventative measure. This approach, common in regulated sectors like finance, identifies legal and compliance vulnerabilities before they lead to disputes.
Governance audits check if trustees and directors are properly appointed, statutory obligations are met, fiduciary risks assessed, scheme rules enforceable, and financial decisions compliant with legal requirements.
“The aim is clarity,” Wasserman says. “When governance is strong, disputes are less likely. If they do arise, the scheme is better positioned to withstand legal scrutiny.”
Complexity calls for a cultural shift
Wasserman argues that trustees and directors must move beyond informal practices, realising that every decision could be tested. Governance, she says, is not a box-ticking exercise but the foundation of trust and stability in community schemes.
“Trustees and directors usually fail not because they do not care, but because nobody points out the real risks,” she says. “Certainty is not achieved by hoping nothing goes wrong. It is achieved by ensuring that when something does, the scheme and its decision-makers stand on solid legal ground.”
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