How will new management changes affect sectional title owners?

Private Property South Africa
Private Property Reporter |
How will new management changes affect sectional title owners?

Key amendments to the Sectional Title Schemes Management Act (STSMA) and Community Services Ombuds Service Act (CSOSA) will bring about a change in the management of sectional title schemes, once promulgated.

The public participation process for changes to the Sectional Title Schemes Management Act (STSMA) and Community Services Ombuds Service Act (CSOSA) were carried out late-2015 and the comments submitted were assimilated into changes made to the original amendments.

According to Michael Bauer, general manager of property management company IHFM, once the new regulations for the two acts are in full effect, key changes in the management process of sectional title schemes will have to be implemented immediately.

“There are certain key changes, and if these are remembered, and due processes followed, then bodies corporate should have no problems with the new ways of managing their scheme” says Bauer.

In order to ensure a smooth transition, Bauer advises that trustees and managing agents plan ahead to have everything in place and ready to change over as soon as the new legislature is enforced.

A breakdown of the changes are as follows:

  • Establishing a reserve fund:

The purpose of a reserve fund is to cover the costs of any maintenance or repairs that may arise to common property.

The required amount suggested is 25% of the budgeted annual levy figure which must be set aside for each sectional title scheme.

This in essence means that if the levies are to be R100 000 for the year, then a reserve amount of R25 000 must be collected which puts the total for the year to be paid in by owners at R125 000.

  • Notifying the Ombud of a domicile:

The chief Ombud, local municipality, and local registrar of deeds need to have the domicile registered so that in events of cases being brought against bodies corporate by owners or vice versa, there is one address by which to serve notices. This is also to simplify matters as all three bodies will have the same address registered.

  • Assisting schemes to recover arrear levies:

In cases where trustees are having trouble recovering levies from owners who are in arrears, the Regional Ombud can be approached to help.

  • Certifying changes of levy contributions:

All changes made to the levy amounts (which usually occurs annually) are to be certified in writing.

  • Limit proxies:

The numbers of proxies held per person will be limited. A person will not be able to be proxy for more than two members.

  • Remedy an inability to obtain either a special or unanimous resolution:

In instances where there is a stalemate and a special or unanimous resolution cannot be reached, the chief Ombud can be approached to assist.

  • Assist where there are differing management or conduct rules:

The chief Ombud must approve and issue a certificate for any rules that may be substituted, added to or changed.

  • Ensure the safe storage and delivery of management and conduct rules:

The rules and regulations of the scheme must be given to people who are new to the scheme, whether owners or tenants and must be available in all meetings held.

  • Keep track of occupancy changes:

The body corporate of sectional title schemes must be notified of details of any change of ownership.

According to Bauer, alongside the above changes, the Community Schemes Ombud Service (CSOS) will also be of assistance to remedy any disputes which may occur, as well as control sectional title governance.

For now, the CSOS service will be available to all with a minimal administration fee and it will also be funded via a small stipend attached to the scheme’s levy payments, which will be proportionate to the levy amounts paid.

Bauer says that any person can apply for the CSOS to assist them in assisting and resolving disputes. In the event that an issue cannot be resolved by the CSOS, it will be referred to either conciliation or adjudication services.

“Once all these changes are implemented, sectional title management should become more streamlined, although there might be a few teething problems along the way (as one can expect with new systems). Trustees should, however, see these changes as a positive move and be ready to implement them as soon as they are promulgated,” said Bauer.

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