Courts are cracking down on estates in South Africa

South African courts are increasingly holding community scheme boards and trustees in estates personally accountable for routine decisions.

VDM Incorporated Director of Community Schemes and Compliance Johlene Wasserman explained that decisions which were viewed as harmless administrative housekeeping are now increasingly being declared unlawful.

She warned 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 said. The consequences of this are immediate and far‑reaching.

Wasserman noted 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,” she said.

“Yet many of these conflicts can be avoided entirely with stronger governance oversight. Most disputes are not the result of fraud or malicious intent.”

These disputes, Wasserman explained, arise because governance failures go unnoticed – sometimes for years – until they erupt into costly, damaging conflicts.

However, recent High Court judgments and Community Schemes Ombud Service (CSOS) rulings have revealed that trustees and homeowners’ association (HOA) directors are being held to far higher standards of accountability than previously, with courts interrogating:

• Whether trustees and directors were properly appointed
• Whether decisions were taken within lawful authority
• Whether fiduciary duties were breached
• And whether governance structures comply with the Sectional Titles Schemes Management Act for bodies corporates and/or the scheme governance provisions of the HOA

“This intensified scrutiny is reshaping how authority, compliance, and fiduciary responsibility are being interpreted across community schemes,” Wasserman said.

She cautioned that in 2026, ignorance of governance law is no longer a defence for community scheme boards.

“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,” she said.

Legal advice is failing schemes

Wasserman explained that most schemes seek legal assistance only after a dispute has escalated. This could be 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. And that’s the most expensive and stressful point to intervene,” she said.

She urged 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. These audits assess:

• Validity of trustee and director appointments and decision‑making
• Compliance with statutory obligations
• Fiduciary risk exposure
• Enforceability of rules and exclusive‑use arrangements
• Financial decision‑making from a compliance perspective

“The objective is simple: identify vulnerabilities before they become disputes. Governance audits are not about criticism,” she said.

“They 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.”

Wasserman noted that mixed‑use developments, layered schemes, retirement schemes, and developer legacy issues have created governance environments that require specialised legal insight.

“At the same time, 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,” she said.

While many directors and trustees still view governance as a box‑ticking exercise, Wasserman stressed 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,” she said.

For this reason, she said it is critical for community schemes to prioritise preventative governance in 2026.

“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 said.