Homeowners who live in sectional title complexes should not skip out on attending their AGMs. This is according to Chris Renecle, MD of Renprop which manages a number of sectional title complexes in Johannesburg.
“Property is an asset that can grow in value if it is well looked after. Decisions taken at sectional title complex AGMs affect all homeowners and their property values. Homeowners should therefore place great importance on attending their complex AGMs, which is often not the case.”
Renecle explains that every residential sectional title complex is obliged to hold an AGM for its homeowners (members of the body corporate) as it is a legal entity that is required by the Sectional Title Act to provide its members with financial statements, among other things.
He says that during an AGM, the owners of the sectional title units discuss the financial affairs of the complex in an open forum, including the financial statements and future budgets.
“The financial state of a complex has a large bearing on the value of the units within it, and if the financial affairs of a sectional title scheme are not run properly, homeowners stand to lose out financially through loss in property value as well as drastic levy increases or the implementation of special levies to make up for financial losses,” he says. “Owners should remember that when it comes time to sell their unit, many buyers will ask to see the financials of a complex before they purchase a unit in order to ensure it is properly run and managed.”
Many of the decisions regarding projects to be undertaken – such as maintenance, security improvement and gardening projects – and the related costs are discussed at and voted on at the complex AGM.
Renecle says that as property owners in a sectional title complex it is important to know what is being done to take care of the common areas and maintenance issues, which service providers are being appointed for the task and if any of the projects will require a special levy to be raised.
“In this day and age, most homeowners need to budget carefully for their property related expenses, and knowing the financial state of the complex in which you live is a part of that, as special levies could impact budgets quite dramatically,” notes Renecle.
The complex chairperson as well as its trustees are elected at the AGM, and these fellow property owners take care of the day-to-day finances and operations of the complex and give instruction to the managing agent. “It is therefore important to know who these representatives of the complex homeowners are and that they take an active interest in ensuring a better living environment for all residents. This can often be determined by the trustee’s report which gives a detailed account of what went on in the complex over the past financial year in terms of projects undertaken and issues that arose and how they were addressed.”
Renecle points out that of great importance is the fact that direction is given to the trustees during the AGM and any restrictions (for example, the maximum allowed to be spent on discretionary items not budgeted for) placed on them by the body corporate. Other items for discussion include levy increases and insurance related matters.
Renecle concludes by saying that essentially homeowners who do not attend their complex AGMs don’t have a say in the running of the complex, the management of the finances and ultimately the value of their property investment. He therefore advises all sectional title property owners to attend their AGMs in order to protect their investment.