AS the long-awaited Registration (Shared Community) Bill hobbles its way through the legislature, questions abound — in the absence of clearly defined guardrails when it comes to governance and management issues — about remedies immediately available to property owners within these communities.

The Bill, once passed into law, is expected to finally establish a clear legal framework for all new and existing shared communities that are not strata-titled. Much like strata legislation, it will regulate shared spaces such as gated subdivisions, town house clusters, semi-detached and detached-unit spaces, and other developments. It will also bind homeowners and community leadership to the rules they sign to, bringing order to the many disputes these communities have grappled with over the years.

Without the strong oversight of this legislation, citizens’ associations and homeowners’ associations (HOAs) in non-strata communities are not recognised in law as legal entities and are powerless to act against issues such as maintenance delinquency. Despite the surge in attractive gated developments across the island, these HOAs and other management bodies currently have no solid legal footing to enforce their rules, even though HOA covenants and restrictions bind homeowners contractually.

The new legislation is expected to address these and other issues such as how money is managed, how boards are elected, who can sue or be sued, collecting unpaid maintenance, removing unauthorised structures, preparing annual financials, and who has oversight.

Organisations like the Realtors Association of Jamaica have been pressing for the Bill to be passed into law, lobbying for movement with leaders of both major political parties over the years. In 2022, Prime Minister Andrew Holness said Government was in the final stages of putting in place the legislation, and as at 2023-2024, the status of the draft Bill was in the review stage on the Government’s Legislation Programmes listing.

But until the Bill becomes law, what happens when homeowners attempt to navigate conflicts on their own with their homeowners’ management teams, whether over owed maintenance fees, concerns about board tenure, transparency in operations, or executive spending decisions?

Corporate and commercial attorney Chantal Simpson outlined the legal steps, specifically when a community is registered as a company under the Companies Act. She said there is the requirement to have annual general meetings (AGMs) and a requirement to present audited financials at the AGM each year. The auditor must be present to answer questions, and anyone obstructing this process faces fines of up to $100,000.

If an HOA is incorporated as a company but fails to provide audits or detailed financials, residents’ recourse is the court system.

Under Section 144 of the Companies Act, directors must maintain proper books showing income and expenditure. Failure to do so may result in six months’ summary conviction or a $50,000 fine, the same penalty for failing to present audited accounts at a general meeting. If no auditor is appointed, the minister has the authority to appoint one.

The Companies Office of Jamaica (COJ) stresses in its compliance framework that all companies must file mandatory documents throughout their lifespan. Late filings attract fees, and ongoing non-compliance can lead to prosecution, lawsuits, or disqualification of company officers.

Companies limited by guarantee, the category under which an HOA would be registered, must file financial statements along with their annual returns, COJ said.

Annual returns are particularly significant, the COJ notes, because they track shifts in ownership or management. Once a company appears on the register, it must comply with statutory obligations whether or not it is actively doing business.

Opinions differ on whether the legal route or community route is best under circumstances in which there is discord between homeowners and their community management bodies.

Venice Williams, partner and head of the Real Estate Department at Lewis, Smith, Williams, and Co, prefers a more community-driven approach. She advises using internal rules and by-laws before escalating matters.

A shared community’s bylaws and regulations should by right have procedures regarding addressing financial oversight, audits, and dispute resolution. Members of the community are generally entitled to see the books, minutes, and expenditure reports, and a formal request for an independent audit of the association’s finances can clarify its financial standing.

Williams encourages attempting internal resolution and addressing the matter within the community’s governing structure first. Only if the board is unwilling to cooperate would there be a clear red flag supporting the case for external action.

Because subdivisions rely on member participation and elected leadership, issues such as board tenure or governance concerns can often be resolved by calling a special AGM where members can vote — by majority or unanimously — to remove or replace the board, Williams said.

“There is legislation that allows you to go to court if you find that funds are being mishandled, and association rules speak to how to appoint and remove members,” she said. “The rules that govern the association talk.”

Williams emphasised that homeowners have significant power over how their communities are run. If annual returns aren’t being filed, for example, residents can remove the board, file the returns themselves, and pay the late fees. Striking the community from the company register for non-compliance, for example, she warned, may not serve the community’s best interests.

A mediator at heart, she prefers collaborative solutions.

“The best approach is never a draconian approach,” she said.