Various amendments have been made to the Prescribed Management Rules (PMR) for sectional title schemes, which have been published in the Government Gazette and took effect on the 1st August 2015.
Trustees need to read through these amendments carefully and be sure they understand each one, says Michael Bauer, general manager of the property management company IHFM.
The first change is to PMR 7, which corrects an error that was made in the previous rules, of a reference to sub-clauses that didn’t exist. Management rule 7 relates to the nomination of trustees and deals with acceptances of nominations, deadlines for nominations, who is eligible to become a trustee and who is able to nominate trustees.
PMR 15 has been amended to allow owners of units to attend trustee meetings on invitation but owners are not allowed to vote at these meetings. Owners previously had the right to attend and speak at meetings, so this change could be seen as a limitation with regard to owners’ rights, said Bauer.
PMR 31, sub-rule 4Aa deals with the continuous collection of levies. There are still a couple of errors in this sub-clause, however, said Bauer. The first is that the numbering is incorrect in that it should be sub-rule 4A, as the previous clause with that numbering was deleted in 2013 and the new clause basically replaces it.
It now reads ‘After the expiry of a financial year and until they become liable for contributions in respect of the ensuing financial year, owners are liable for contributions in the same amounts and payable in the same instalments as were due and payable by them during the expired financial year: Provided that the trustees may, if they consider it necessary and by written notice to the owners, increase the contributions due by owners by a maximum of 10 per cent excluding capital expenditure to take account of the anticipated increased liabilities of the body corporate. Such increase shall be ratified or changed after the Annual General Meeting by the trustees once the body corporate has approved or amended the schedule of income and expenditure.’
The problems with this correction, said Bauer, are firstly, that ‘capital expenditure’ is referred to here but there is no referral to it anywhere else in the rules, nor is it properly defined. Secondly, the increase that is referred to is vague, does it mean capital expenditure may not be included in the increase or must it be added over and above the 10% to the levies charged? The last problem is that this wording allows trustees to change or increase levies after the budget has been approved, whereas they should only be determining levies according to the amount in the approved budget, said Bauer.
The last change is to PMR 70, in that owners are now responsible for any maintenance that is needed on improvements made to their exclusive use areas. What this change does not take into account though, said Bauer, is that the Sectional Titles Act clearly states that the body corporate must take care of costs of insurance and maintenance of exclusive use areas (section 37 (1)(b)).
“While changes to the PMR were necessary, they will still cause some complications in their interpretations,” said Bauer. “They must be heeded, however, and trustees should be aware of how this will affect certain aspects of managing their scheme.”