Advice and Opinion

To note: key changes for trustees in sectional title schemes

“Now that the Sectional Title Schemes Management Act (STSMA) and Community Services Ombuds Service Act (CSOSA) have been signed by the Minister of Human Settlements and the President has signed the Proclamation Notice for these Acts, certain changes will have to be made in the management of sectional title schemes effective on the date that they are published in the Government Gazette, which is envisaged will be the 7th October 2016”, says Michael Bauer, general manager of property management company IHFM .

There are some transitional provisions set aside, so that trustees and managing agents have time to make changes, such as the Regulations on fees and levy collections, which will commence 90 days from the date of publication. The provisions of the CSOS Regulations regarding the registration of schemes is 30 days from the date of publication and the filing of schemes’ governance documentation 90 days.

The public participation process was carried out late-2015, and the comments that were submitted have been assimilated and incorporated into changes made to the original amendments.

“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”, he said.

The changes to be made are to:

· Establish a reserve fund. At this point the amount that is suggested will be required by each sectional title scheme to be set aside is 25% of the budgeted annual levy figure, i.e. 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. The aim of this fund is to cover costs of future maintenance and repairs to common property.

· Notify 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.

· Assist schemes to recover arrear levies. The regional ombud can be approached to help in cases where trustees are finding it difficult to recover arrear owner contributions.

· Certify changes of levy contributions. When the levy amounts are to be changed (which is usually annually), this must be certified in writing.

· Limit proxies. There will be a limit on the numbers of proxies held per person and 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 future the chief ombud can be approached to assist in cases where there is a stalemate in achieving either a special or unanimous resolution.

· Assist where there are differing management or conduct rules. In cases where the rules have been substituted, added to or changed, the chief ombud must approve these and a certificate will be issued to that effect.

· Ensure the safe storage and delivery of management and conduct rules. All the rules must be made available at all meetings and given to people who are new to the scheme, whether owners or tenants.

· Keep track of occupancy changes. The body corporate of sectional title schemes must be notified of details of any change of ownership.

In addition to the above changes, the Community Schemes Ombud Service (CSOS) will be there to assist in dispute resolutions and control sectional title governance. The 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. The amounts payable will be proportionate to the levy amounts paid.

Any person can apply for the CSOS to assist them in disputes and this will include assistance in coming to a resolution on matters. The CSOS will, however, refer matters that cannot be resolved 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.