This month, I thought I would highlight a few important aspects introduced by the Sectional Titles Schemes Management Act and the Community Schemes Ombud Services Act (Acts 8 and 9 of 2011, promulgated in October 2016). These introduced a number of provision with consequences for property owners, trustees, investors and developers.
Sectional Titles Schemes Management Act
The act introduced detailed administration, reporting and auditing procedures such as:
Maintenance – a 10-year maintenance plan is compulsory in addition to a separate long-term maintenance reserve fund based on expected costs. This is on top of a current short-term maintenance budget. This would necessarily impact on the levies.
Managing agent – each scheme must have a managing agent to run the property and report to the trustees on various matters. This is an important provision as the person who handles the body corporate is not allowed to handle funds unless they are registered estate agents.
Meetings and proxies - the act is specific about scheduling meetings, establishing a quorum and voting by proxy. No person may hold more than two proxies and an owner may only vote once, irrespective of how many units they own. This is important to ensure that there is no abuse of power.
Levies – all community schemes must be registered with the Community Schemes Ombud (CSOS) and pay an annual fee which is recovered from the levies. Schemes must send regular copies and reports to the ombud’s office on the financial health of the scheme as well as submit an audited annual report. They also need to register a domicile with the chief ombud, local municipality and local registrar of deeds. All changes to body corporate rules and regulations and levy contributions must be certified in writing.
Community Schemes Ombud Services Act
Aside from aligning all housing-related legislation under the Human Settlements Department, the act grants the Ombud greater control and regulation of all community housing schemes including powers to advocate rule amendments to community schemes which include sectional title development schemes, share block companies, home- or property owners’ associations, retirement schemes and housing cooperatives or group housing.
It also empowers the Ombud to deal with disputes, thereby freeing up the courts and settling disputes faster and more cost effectively. The Ombud can be approached not just to settle disputes, but also help schemes recover arrear levies. Those who seek the service’s intervention, are required to pay various fees.
Overall, property owners should familiarise themselves with the legislation as the body corporate and trustees of a scheme carry much more responsibility. They can be held liable for malefidi (gross negligence or bad faith) if not registered and compliant with CSOS.
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