HOA Power plays under fire as courts clamp down

• Courts are overturning trustee removals and invalid decisions due to poor governance and conflicts of interest
• “Casual” disclosure is not enough, full transparency and recusal are legally required
• Trustees risk personal liability when private interests influence scheme decisions

Courts crack down on HOA governance abuse

South Africa’s courts are sending a clear warning to community schemes: governance shortcuts, hidden interests, and power plays will not stand.

With millions living in sectional title schemes and HOAs, trustees and directors often seek quick, cost-effective solutions. But recent rulings show that cutting corners, especially around conflicts of interest and procedural fairness, is exposing boards to serious legal risk.

According to Johlene Wasserman, Director of Community Schemes and Compliance at VDM Incorporated, many of these risks stem from blurred lines between governance and personal interest.

When trustees wear too many hats

“Across the country, trustees and HOA directors frequently wear multiple hats,” says Wasserman.

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“The trustee who is also the scheme’s attorney, the director whose company maintains the gardens, or the accountant preparing the books, these arrangements often start with good intentions. But they create one of the most misunderstood risks in governance: conflict of interest.”

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Critically, the law does not prohibit trustees from doing business with their schemes. The problem is how it’s handled.

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“The issue is secrecy, inadequate disclosure, and remaining involved in decisions where there is personal benefit,” she adds.

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The 2025 wake-up call‍

The landmark ruling in Cassim v The Trustees of Drakensberg Body Corporate has sharpened the spotlight

In this case, the High Court reinstated two trustees after finding their removal at a Special General Meeting procedurally invalid under the Sectional Titles Schemes Management Act.

The court declared the meeting a nullity, ruling that:

• The managing agent acted beyond its powers
• The CSOS adjudication process was flawed
• Defamatory and unfounded conclusions were made

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“This case underscores that trustees who fail to disclose interests or participate in decisions where they benefit risk personal liability,” warns Wasserman. “The message is clear: full recusal is not optional.”

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The Legal Trap: “Casual” disclosure Isn’t enough

Many trustees believe simply mentioning a potential conflict is sufficient. It isn’t.

Under the Sectional Titles Schemes Management Act and the Companies Act, trustees must act honestly, in good faith, and in the best interests of the scheme.

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“A conflict arises where a board member, directly or indirectly stands to benefit,” says Wasserman.

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The real risk lies in subtle influence:

• Staying in the room during discussions
• Comparing quotes
• Steering decisions informally

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“Influence doesn’t only happen through a vote. Presence alone can shape outcomes. That’s why full recusal is essential.”

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Precedent for accountability

A growing body of case law is reinforcing strict governance standards:

• Singh v The Body Corporate of St Tropez
   Even reasonable decisions can be overturned if conflicts are not properly disclosed.
• The Trustees of the Legacy Body Corporate v Bae Estates and Escapes
   Decisions must be lawful, reasonable, and procedurally fair, trustees must prioritise the scheme above personal ties.
• Stenersen and Tulleken Administration CC v Linton Park Body Corporate
   Governance failures escalate quickly, and High Court scrutiny demands strict legal compliance.

Managing conflicts the right way

To avoid legal fallout, personal liability, and overturned decisions, Wasserman advises:

• Disclose in writing: Clearly record the nature and extent of the interest
• Recuse completely: Leave the room and do not participate in discussions or voting
• Ensure independence: Unconflicted members must assess and decide
• Document everything: Maintain a clear audit trail of decisions

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“In community governance, the conflict itself is often manageable,” she concludes. “The real problem is failing to disclose and manage it properly.”

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Era of informal governance

‍The era of informal governance is over. As courts tighten scrutiny, trustees and HOA directors who blur the line between personal gain and fiduciary duty are being held accountable, legally and financially.

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