Advice and Opinion

Sectional Title Schemes: Prepaid or separate meters advisable


“There’s no doubt that the best way to manage the costs of services such as water and electricity in sectional title schemes is by having separate meters installed for each unit. Even better would be to have prepaid meters for these services as owners only use what they pay for”, says Mandi Hanekom, operations manager of sectional title finance company Propell.

In many sectional title schemes, the municipal costs can be very high, and there will always be a certain percentage of non-or late-payers. If prepaid meters are installed, it makes the management of the defaulters’ debts easier to control.

Prepaid meter installations, however, need a special resolution to be passed, whereas separate meter installations only require ordinary resolution.

The Management Rules contained in the Regulations to the Sectional Title Schemes Management Act (STSMA) provides a clear guide as to how trustees and owners should go about tackling such a project. Section 29 of the Management Rules provides that:

(3) A body corporate must, if so directed by a resolution of members —

 (a)  install and maintain separate meters to measure the supply of electricity, water, gas or the supply of any other service to each member’s sections and exclusive use areas and to the common property; and 

(b)  recover from members the cost of such supplies to sections and exclusive use areas based on the metered supply. 

(4) A body corporate may on the authority of a special resolution install separate pre-payment meters on the common property to control the supply of water or electricity to a section or exclusive use area; provided that all members and occupiers of sections must be given at least 60 days’ notice of the proposed resolution with details of all costs associated with the installation of the pre-payment system and its estimated effect on the cost of the services over the next three years.

“Installing separate meters can be paid for through project finance with a company like Propell (if there aren’t already sufficient funds in the body corporate’s account) to assist managing agents and trustees get the job done with minimum fuss and without having any of the trustees sign surety for the loan,” said Hanekom.

“The loan facility can remain in place indefinitely and will only incur costs when used. With easy access to funds when needed, the trustees and managing agent are, therefore, able to do their job properly, which ultimately is to ensure the scheme is run efficiently and is financially stable.”