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BETONIQ QUALITY SYSTEM
Wi11 Home Owners Association

BETONIQ creates a new way of owning property in Africa by introducing owning a home in a Multi-occupancy property environ ment. The Commenhold is introduced through the “Commenhold and Leasehold Reform Act 2002” ( CLRA2002) and allows for Multi-occupancy buildings to be divided into units and common parts but for ownership for the individuel units te be in the form of a freehold ownership. Commenhold can be applied to resedential and commercial buildings.

There is therefore no landlord allocated from their capacity of freeholder, as the building will be divided into numerous freehold units. In residential properties this will mean that each flat owner will own a freehold rather than a leasehold interest. This is to the advantage to the owner of the flat as their ownership will not be limited by time as it is with a lease and will therefore not be a wasting asset. Unit-holders are therefore not susceptible to the problem of falling property value due to the term of a lease nearing its end. As with a leasehold flat, the ownership will usually be limited to the internal wall, ceiling and floor between each unit and will not include external walls.

As there is no superior freeholder, the rest of the building is owned and managed jointly by the individual unit-holders. They share the management of the communal parts of the premises with the freeholders of the other units. This is done through a Commenhold Commnunity Assosiation ( CCA ), which each unit member is a member of. This is a limited company which will have a Memorandum and Articles of Association.

Rights and obligations between unitholders and the CCR are set out in a Articles of Association or "Commenhold Community Statement".

Memorandum and Articles of Association of the Commonhold Association is registered with Companies House and made available to the public.

In this case, of a new development, the commonhold will be registered without the unit-holders as these will be sold at a later date. Initially, all the units and common parts will be registered under the name of BETONIQ. The individual units are registered as separate titles, which will simplify the subject of conveyancing when the units are individually sold.

The Commonhold Association owns the common parts of the development. It is a private company, limited by guarantee which means that it has members who are guarantors rather than having share capital held by shareholders. These guarantors give an undertaking to contribute a certain amount – usually 1 US dollar as the limit of their liability towards the potential winding up of the company. It cannot distribute its profits to its members, which means that any profits will instead be ploughed back into the company. Only a unit-member can be amember of the Commonhold Association and be able to actively participate in the decision making process in the running of the building. The interests of landlords and tenants can sometimes be conflicting, therefore a Commonhold Association may reduce disputes as, in theory, all members will have similar interests and objectivesforthe building. There is no obligation on the unit holder being a member of the Commonhold Association. TheCommonhold Association is able to estimate the overall costs of maintaining and insuring of the property rather than being simply obliged to pay an agreed percentage of the expenditure.

BETONIQ ( FUNCTIE ) will form and register the Commonhold Association and draft the Commonhold Community Statement. Registration will give the development a number of freehold titles, which will be registered in the name of BETONIQ. Owners Association ( or Commenhold Community Association ) The Homeowners Assosiation (HOA) is a non-profit organization that has an independent legal entity from its members, and has the rights to prosecute. It is responsible for the management, monitoring, maintenance and money spent on joint areas within the Jointly Owned Property, where each unit owner is granted membership at the Owners Association. How is it formed The Homeowners Association is formed by force of law upon the first ownership of a property unit within a Jointly Owned Property by BETONIQ and in accordance with regulations, where the association has to be registered with the Companies House. How is it managed The Homeowners Association is managed by a board of directors elected by unit owners within the project in freehold ownership areas. The board comprises 5 to 7 members in addition to three provisional members, with a board chairman elected as well. The board is responsible for managing the Homeowners Association either by: Appointing an association director, who is one of the owners that should be granted a management permission by local law or contracting with a management services company that is registered and licensed by local law. The first act of a Homeowners Association is to establish a set of covenants, conditions and restrictions (CC&R). The CC&R establishes monthly dues for all homeowners, and can restrict how a person can use his or her own property or joint property. For example, a CC&R may have rules governing the number of people who can occupy a house, the colors an owner can paint a house, or the times at which common areas like exercise rooms or pools can be used (or BETONIQ will make the CC&R). The CC&R has the goal of making the property pleasant for all residents, but potential purchasers should definitely speak with a few other homeowners prior to purchasing a house that comes with HOA membership. Some CC&Rs are more wish fulfillment than reality, and others are almost totalitarian in their control over an owner’s behavior. Fee Those who own property in the established area govern the Homeowners Association. When a person buys a home in an area with an HOA, he or she becomes a member of the group and is responsible for membership dues. HOAs do have a membership fee, so the decision to purchase a house or condo belonging to one should be considered from a financial point of view. Maintenance of joint property vs Fines The homeowners Association can act on owners if they do not strictly follow the CC&R. It can assess fines, fees, or even evict those who do not abide by the rules, even if the infractions are minor. Renters in particular must be careful to understand the guidelines regarding the rights and responsibilities of the tenant in regards to the rules. Finally A successful HOA gives property owners a way to solve minor disputes, as well as to organize repair or maintenance of shared property. Many find them to be well worth the extra fees associated with owning a property. When well administrated, one can provide a certain predictability in owning a home, and clearly delineate both the homeowner’s and the association’s responsibilities. Start of the Homeowners Association BETONIQ Property Management specializes in the establishment and organization of new Homeowners Association (HOA's). Well before the client becomes the owner, BETONIQ Property is hard at work behind the scenes with the organization of the HOA, this is done in close consultation with the Developer, Buyer, Realestate Agent and Notary involved. BETONIQ Property Management will provide a supporting role in the founding of the new HOA and final development of the deed of Partition. Finally BETONIQ Property Management will help the owners establish the HOA where issues such as governance, operating budget (and service), laws, maintenance and kost reservations are arranged. In addition, BetiniQ Property Management assist, if requested, the board of the HOA with shutdown (maintenance) contracts for the building or complex. Roadmap to start a HOA 1. Members of the Home Owners Association It is the responsibility of the FUNCTIE to know which apartments and owners are part of the HOA . In the Deed of Partition the rights associated with the HOA and the distribution key to this are applicable . Property data can be retrieved from the Property Register of the respective owners . 2. Organizing Startup Meeting The Homeowners Association is a legal entity . The owners need to worry and decide about the shape and structure of the HOA . The main formalities have to be arranged by a meeting to organize startup. The first meeting is organized by FUNCTIE BETONIQ based on an prefixed agenda . The agenda includes topics that will be discussed . On these subjects the owners must decide with mijority of votes ( half plus one ) . When there are not enough votes present , they cant take any legal decisions . A second meeting will be organized by FUNCTIE within two to six weeks, based on the same agenda . The then attending owners can take legally binding decisions , regardless of the number of attendees . The decisions taken in the meeting should be recorded in the HOA minutes. 3. Tasks and roles appointed The startup meeting of owners should decide on the tasks during and roles within the HOA. The first meeting is chaired by FUNCTIE, this meeting shall appoint a director, chairman, auditing committee and technical committee. After the appointment, FUNCTIE is no longer involved in subsequent decisions.The HOA may choose to outsource to a professional administration office on administrative, financial and technical management. 4. Opening of a Bank account number The director / administrator will need to open bank account in the name of the HOA. On this account, the owners pay their regular contributions. The debts and expenses of the HOA are paid from this account. 5. Insurances In the Deed of Partition regulations are determined on what dangers the HOA is required to insure such liability and property. In addition there is the option to exclude non-prescribed mandatory insurances such as a glass or driver's liability insurance. The director / administrator must ensure it is closed and kept up-to-date. 6. Drawing up a Multi-Annual Maintenance Budget (MAMB) The HOA aims to defend common interests and thereby provide for the maintenance of the property. Owners must make this agreement together. To create a maintenance chart it is useful to put up a multi-year maintenance budget (MAMB). This plan is to keep the property in good condition through requiring maintenance. Based on the MAMB, the HOA meeting decides how much should be deposited annually in this reserve fund to provide for (major) maintenance. 7. Establish regular contribution The HOA has some fixed costs. These include insurance, maintenance, cleaning, porch lighting, elevator, and the reserve management. Based on the fixed costs, the HOA creates a budget. On the basis of the budget, the HOA’s fee per apartment will be calculated and determined (to scale). Each year, the financial documents can be checked and the HOA’s fee changed. Invitation and Agenda serving Startup meeting Homeowners Association We would like to invite you to attend the meeting of owners of the……………………. HOA: Date: Time: Location: AGENDA: 1. Welcome and establish quorum * 2. Registration Chamber of Commerce to appoint director 3. Outsourcing management to………………………… HOA Management 4. Building insurance 5. Architectural record report > what actions should be done 6. Determining service kosts, periodically for minor and major maintenance 7. Any other business 8. Closure * The minimum number of votes that must be present to take valid resolutions present at the meeting (at least half of the total number of votes required) Sincerely, Contract for Deed of Partition Domestic Rules / CC&R HOA minutes Opmerkingen Oliver: Noted then this issue is covered. If you need further input form here then let me know as I can possibly get a lot of examples that will help refine process. The Australian homeowner property laws were heavily utilised here as guidelines on the market here even though it was in the early and immature stages – loads of issues. ß What we did for some developments was to request the first annual service charge as part of the final payment thereby giving a year’s leeway – we made sure that the service charge was slightly higher than required and with this when the reconciliation was done at the end of year one we did not refund, but highlighted this in the annual statement and reduced the second year payments – this appeased the first year costs and from then onwards it becomes a slight challenge with collections, but if done smartly by then the home Owners association should be fully in place and it becomes their problem. With regards to service charge models I have carried out for communal facilities and buildings – in this case for the buildings relatively simple as not mixed use.

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