Routine decisions by community scheme trustees and directors, once viewed as “harmless administrative housekeeping”, are increasingly being found unlawful by South Africa’s courts.

That’s according to attorney Johlene Wasserman, Director of Community Schemes and Compliance at VDM Incorporated, who warns that this fast-developing legal trend is exposing schemes to significant financial risk and placing trustees and directors at real personal liability.

“Actions that were previously considered low risk are suddenly being tested against strict legal standards,” she says, adding that the consequences are immediate and far-reaching.

Wasserman, a governance specialist and former senior official at both the Community Schemes Ombud Service (CSOS) and the Property Practitioners Regulatory Authority (PPRA), says community schemes across the country have entered a period of heightened legal vulnerability, with disputes escalating in both frequency and severity.

“The sector is under unprecedented pressure as legal scrutiny intensifies, with directors and trustees increasingly being blindsided by risks they never realised were embedded in their everyday decision-making. Yet many of these conflicts can be avoided entirely with stronger governance oversight”.

Wasserman added that most disputes are not the result of fraud or malicious intent. They arise because governance failures go unnoticed — sometimes for years — until they erupt into costly, damaging conflicts.

Recent High Court judgments and CSOS rulings have revealed that trustees and homeowners’ association (HOA) directors are being held to far higher standards of accountability than previously.

Wasserman warns that courts are interrogating whether trustees and directors were properly appointed, if their decisions were taken within lawful authority, and whether fiduciary duties were breached. Courts are also keeping a watchful eye on whether governance structures comply with the Sectional Titles Schemes Management Act (STSMA) for corporate bodies or the scheme governance provisions of the homeowners association.

“This intensified scrutiny is reshaping how authority, compliance, and fiduciary responsibility are being interpreted across community schemes. Ignorance of governance law is no longer a defence. Trustees and directors are being judged not on their intentions, but on whether their decisions are lawful. Preventative governance is no longer optional; it’s essential risk management”.

Most schemes only seek legal assistance once a dispute has already escalated — when levies are challenged, when CSOS applications are lodged, or when trustees or directors face allegations of misconduct. “By the time lawyers are called in, the question is no longer how to prevent the problem — it’s how to contain the damage”.

Wasserman urges community schemes to adopt governance risk auditing, describing it as a preventative approach long used in regulated sectors such as finance, education, and corporate governance.

“The objective is simple: identify vulnerabilities before they become disputes. Governance audits are about clarity. When governance is sound, disputes are far less likely — and when they do arise, schemes are far better equipped to withstand legal scrutiny”.

Mixed-use developments, layered schemes, retirement schemes, and developer legacy issues have created governance environments that require specialised legal insight, Wasserman says. “Residents are increasingly willing to challenge decisions they believe are unfair or unlawful, so trustees and directors have to move beyond informal practices and recognise that every decision may one day be tested”.

While many directors and trustees still view governance as a box-ticking exercise, Wasserman warns that the opposite is true. “Lawful governance is the foundation of trust, stability, and cohesion. Trustees and directors don’t fail because they don’t care — they usually fail because nobody shows them where the real risks lie”.

Wasserman says this is why it’s critical for community schemes to prioritise preventative governance. “Certainty is not achieved by hoping nothing goes wrong. It’s achieved by ensuring that if something does go wrong, the scheme and its directors and trustees stand on solid legal ground,” she advises.

zelda.venter@inl.co.za

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