It’s often said there are three tiers of government in South Africa: national, provincial and municipal. However, there is an unspoken fourth tier, namely residential governance through Homeowners Associations (HOAs).
On paper, HOAs appear straightforward. The pamphlets advertising the idyllic lifestyle depict friendly neighbours collectively managing shared spaces and interests. In reality, however, it can be the exact opposite. HOA governance wields significant power over people’s homes, finances and well-being. Often, the promise of a lifestyle filled with peace and tranquillity is simply not the case.
An overview of HOAs
Many HOAs have long operated in a governance shadow zone. They remain informal, unstructured and lacking transparency or accountability.
To be clear, not all HOAs fall into this category. Legislation does exist that sets out clear obligations and standards for these bodies. However, in practice, trustees and members often do not know this legislation. In many cases, it is also not actively promoted.
Since writing an article covering this topic in April this year, which thousands of concerned homeowners in gated estates read, troubling circumstances have come to light. These circumstances expose the consequences of this governance vacuum. They also shine a spotlight on intimidation, abuse of power and the exclusion of dissenting voices.
Recent developments, most notably the Community Schemes Ombud Service (CSOS) Directive of 18 July 2025, mark a legal and governance turning point. Trustees and managing agents now face clear personal liability. They also risk criminal prosecution under South African law for failing to fulfil their fiduciary duties. This is a wake-up call not just for HOAs but for governance across private, corporate and public sectors.
Why HOA governance matters beyond the gate
Poor HOA governance is not just a local inconvenience. It has profound financial, emotional, and social impacts.
Trustees who act without proper oversight impose excessive levies, enforce unfair rules and silence those who challenge the status quo. Many homeowners feel powerless, watching their biggest investment turn into a source of distress.
Some people believe HOA governance is different from corporate or government boards, and that the same rules or frameworks do not apply. I heard this firsthand when someone said, “We’re not a corporate, so these governance principles don’t apply here”. The CSOS Directive and South Africa’s Companies Act 71 of 2008 (as amended) show that this mindset is outdated and risky.
The CSOS directive and the Companies Act – raising the stakes
The CSOS Directive explicitly warns trustees and managing agents to comply with their legal obligations or face penalties. These penalties include fines and imprisonment of up to 10 years.
In HOAs established as Non-Profit Companies (NPC) under the Companies Act, individuals often referred to as “trustees” are, in legal terms, directors of the NPC. This means that the Companies Act’s provisions, including Section 162, which allows courts to declare a director delinquent for serious misconduct or breaches of fiduciary duty, apply directly to those serving on HOA boards.
Just as a trustee’s misconduct in an HOA can damage their prospects in the corporate or public sector, a history of delinquency or governance failures elsewhere should raise red flags. These red flags matter when appointing trustees to an HOA board.
Similar to the Companies Act, the CSOS Directive makes it clear that trustees carry real fiduciary responsibilities with real consequences. It follows that HOAs should introduce structured appointment processes. These processes should include formal declarations by candidates of any prior governance sanctions or adverse findings, as well as independent checks where feasible.
Without such due diligence, HOAs risk placing decision-making power in the hands of individuals whose past conduct could undermine HOA governance and the community’s reputation from the outset.
HOA trustees can no longer claim ignorance or casual voluntarism. Their actions carry real legal weight and personal risk. As fiduciaries, they must act with honesty, care and skill. They must also act in the best interests of their gated communities. Importantly, they must be willing to be held accountable for their actions.
Disclosure and vetting – the missing link in trustee appointments
While enforcement mechanisms address failures after the fact, an equally important step is often overlooked. This step involves the disclosures a trustee should make before accepting a leadership position within an HOA.
Too many HOAs still appoint trustees informally. They do so without vetting or requiring candidates to declare past misconduct, delinquency or criminal convictions. This gap exposes communities to further risk and undermines trust.
HOAs should adopt a more structured nomination and vetting process. This process should mirror those in corporate and public boards and require full disclosure from trustee candidates. Furthermore, this transparency is essential to ensure that only those qualified and with clean governance records serve in these positions.
Failure to disclose prior governance issues, including delinquency in the business sector, should be grounds for immediate removal. Failure to do so may expose individuals and HOAs to legal and reputational harm, as well as other unintended consequences.
Broader implications – reputational risk and career impact
This new era of accountability has repercussions beyond the HOA gate. Trustees found delinquent or prosecuted face reputational damage. Such action can affect their private sector careers and eligibility for future board appointments in corporate or government spheres.
The King IV™ and its replacement, King V™ governance code stress integrity, transparency, and accountability as foundational for all governance roles. Trustees who ignore these principles risk exclusion from broader leadership opportunities.
As Warren Buffett famously said, “It takes 20 years to build a reputation and five minutes to ruin it”. For HOA trustees, this could not be more accurate. Those aware of these personal liabilities will be far more discerning before accepting such positions, especially if they must work alongside inexperienced or inept colleagues.
A call to action – raising governance standards across the board
HOA homeowners, trustees and managing agents must collectively raise the bar. Education about legal duties, demand for transparency and the professionalising of HOA governance frameworks are essential. The same applies in the corporate and government sectors.
Managing agents should seek professional governance and secretarial qualifications aligned with corporate standards. HOAs should insist on proper vetting, training and ongoing trustee development. Members must be empowered to hold leadership accountable, not just for compliance but for ethical stewardship of their communities.
The standards South Africa is setting through these HOA governance reforms offer valuable insights for governance globally. These reforms highlight that good governance is not a privilege reserved for corporations or governments. Instead, it is a fundamental right in all spheres where power is exercised.
A governance movement in the making
The CSOS Directive, read alongside the Companies Act provisions, heralds a new chapter for HOA governance. This chapter focuses on transparency, accountability and 
Serving as a trustee is no longer a casual volunteer role, as many may have believed. It is now a position with significant legal and ethical responsibilities.
Homeowners deserve communities governed with fairness, dignity and respect. Trustees must rise to the challenge, armed with knowledge, integrity and a commitment to good governance. This is not just reform. It is a movement towards reclaiming the true meaning of community for the place we call home.
Terrance Booysen | Chief Executive Officer | CGF Research Institute | mail me |