MANAGEMENT OF SECTIONAL TITLE SCHEMES

Managing a sectional title scheme can be challenging at times. Fortunately, some of these challenges can be solved with a cursory knowledge of the Sectional Title Schemes Management Act[1] (hereinafter “the STSMA”). This article focusses briefly on 5 questions we are most asked about in relation to the management of sectional title schemes.

1. How does the Body Corporate decision-making process work?

In some cases, the decisions of a Body Corporate can be made by the Trustees (by way of resolution) and in other cases, by a majority vote by the members of the Body Corporate. The decision-making process depends on the nature of the decision that needs to be made. For example, the members must decide on the approved budget[2], while the Trustees can decide whether to impose a special or increased levy[3], a member of the Body Corporate is however entitled to dispute the extent of the amount.[4]

If the majority of Trustees of the Body Corporate are in favour of a decision, they adopt a resolution. If for example, the majority of the trustees vote in favour of a quotation, that quotation is accepted. Once the quotation is accepted, there is a binding contract between the Body Corporate and the party who offered the quotation.  However, in certain circumstances it is possible for the Body Corporate to be bound by a decision which was not supported by a resolution.

 If the Trustees did not vote in favour of a decision and the chairperson or a trustee entered into an agreement on behalf of the Body Corporate without the approval from the other trustees, the agreement is not always null and void or unenforceable against the Body Corporate.

2. Is a maintenance plan necessary?

According to the STSMA, the Body Corporate or the Trustees must prepare a written maintenance, repair, and replacement plan for the common property.[5] This written plan must set out procedures for the prescribed necessary maintenance of the property over a period of 10 years. It is common practice for the Managing Agent of the complex to draw up the maintenance plan but, it is also possible to outsource the drafting thereof at an additional cost.

Once a maintenance plan has been drawn up, it needs to be approved by the members in a general meeting. An important consideration of the plan should be whether it fits the financial capabilities of the Body Corporate and its members.  If the plan is approved, the members will create conditions for the payment of money from the Body Corporate’s reserve fund. If there are not insufficient funds in the reserve fund, the maintenance plan may be funded by increasing existing levies or by introducing a special levy.

3. What process should members who want to install solar panels/systems on the roof of their units follow?

This topic forms the subject matter of countless CSOS decisions. When a member of a Sectional Title Scheme wants to install solar panels or a solar system on the roof or outer part of its unit, it should adhere to the rules regulating the aesthetics of the complex. Usually, such rules provide that members are prohibited from making alterations to the common property which, in the discretion of the trustees, are unsightly. Preferably, specific provision should be made for the installation of solar panels/systems on common property in the Conduct Rules of the Body Corporate.

If no provisions are made, the Body Corporate will be guided by the Prescribed Management Rules in reaching a decision.[6] It is however our view that the Trustees should be slow to reject a member’s application for the installation of a solar system given the current situation with load-shedding and electricity shortage in South Africa.

To avoid any problems, a Trustee can propose an amendment or supplementation of the Body Corporate’s rules. Amendments and supplementations of the rules are made by a way of a special resolution.

Once special resolution is passed, the new rules should not only bestow the authority to consent to solar panel installations onto trustees but also expressly stipulate that the owner is responsible for financing and overseeing the installation, insurance, and maintenance of the system. Furthermore, the rules should also stipulate that the owner is under the obligation to protect the integrity of the common property, which includes waterproofing the system and ensuring the safety of all residents.

4. How should a Body Corporate proceed with legal collections?

Before the Body Corporate can approach the court for relief sought against an owner for outstanding levies, the trustees must adopt a resolution regarding inter alia interest on arrear levies and levy increases. This resolution should contain the exact percentage of interest p/a bound to be levied to an owner’s account once it falls in arrears. Usually, the managing agent of the Body Corporate hands an arrear levy account which has been outstanding for more than 3 months over to Attorneys on its panel.

It is important that the majority of the Trustees, by way of resolution, appoints the specific Attorneys proposed by the Managing Agents in order for them to attend to the collections of the scheme. The Attorneys will in turn provide the Body Corporate with the necessary mandate and FICA documentation to complete before commencing work. The Body Corporate will, in most cases, be the Attorney’s client and as such be liable for the Attorney’s fees, not the Managing Agent.

5. How should a Body Corporate keep track of its legal matters?

It is good practice to assign someone to keep a record of all the legal matters in the complex. Someone also needs to be tasked with producing well researched and comprehensive reports on legal matters affecting sectional title schemes on a periodic or urgent basis (if the circumstances so require). These duties can be assigned to any of the Trustees, even though the Managing Agent, if any, is usually tasked with overseeing the legal affairs of the Body Corporate.