The question of body corporate fines

Private Property South Africa

Although sectional title living can be rewarding it also presents challenges, particularly when residents break the rules. In many sectional title developments there are rules which govern certain conduct such as excessive noise, littering or damage to common property. When residents break a rule, a fine can be imposed. Or can it?

According to the Paddocks Club, a specialist sectional title and HOA training firm, neither the Sectional Titles Act nor the prescribed rules (the governing legislation) provide for the imposition of fines or penalties on apparent transgressors of a scheme’s rules. Therefore the default position is ‘no’.

However, it is possible for a body corporate to impose legally enforceable fines if the body corporate has properly adopted a carefully drafted rule which provides for fining owners and residents.

The procedure:

Carryn Melissa Durham who heads up Paddocks’ Private Consulting Division outlines the procedure which should be followed in respect of fines.

According to Durham, complainants should be required to lodge a written complaint or incident report to the trustees or managing agent. The owner and tenant should then be given a written notice of the particulars of the complaint in writing and a reasonable opportunity to respond to the complaint. The transgressor must be given sufficient information and adequate detail on the nature of the conduct as well as the specific sections of the Act or rules that were allegedly breached. The offender must be warned that if he or she persists with such conduct or contravention, a fine will be imposed.

If the owner or occupier persists with the conduct, the trustees should send a second notice pointing out that the contravention is continuing or has been repeated and invite the person to a trustee meeting at which the person can explain or defend their actions. The notice time of this meeting should be long enough for the person to prepare a defence. The rule must therefore include an opportunity and process for a hearing for the transgressor. The trustees must also take into account any representations received or made by the owner.

At the meeting the transgressor must be allowed to state their side of the matter, call witnesses in their support and cross examine any witnesses the executives might have to the transgression. The trustees should then discuss the evidence in private and decide whether or not to impose a fine.

Draft it properly!

Paddocks points out that for a fining rule to be enforceable, it must be carefully drafted (preferably by an attorney who is well versed in sectional title law) and passed by the required consensus level i.e. either a special resolution for a conduct rule or unanimous resolution for a management rule and it must be filed at the deeds office.

Durham adds that the procedure that must be followed in imposing fines must be reasonably, fairly and equally applied to all owners and residents. She adds that it is important to note that an immediate fine cannot be imposed without following due process and that the fine imposed cannot be added to the contribution which an owner is obliged to pay in terms of section 37 (1) of the Act and claimed by the trustees as part of the monthly instalments payable by the owner.

For more information, insights and commentary regarding fines and their enforceability in sectional title schemes follow these links:

http://www.paddocks.co.za/paddocks-press-newsletter/the-validity-of-a-penalty-rule-and-enforceability-of-the-fine-implementation/

http://paddocksblog.com/2013/06/03/are-fines-in-sectional-title-schemes-legal/

http://www.paddocks.co.za/paddocks-press-newsletter/making-fines-stick-in-community-schemes/

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