The legislation governing the Sectional Title Industry has recently been updated. Parts of the old Sectional Title Act 95 of 1986 are still in force, but two new acts were promulgated on 7 October 2016, namely the Sectional Title Schemes Management Act (STSMA) and the Community Services Ombuds Service Act (CSOSA).
The STSMA will deal with the operational requirements around the management of Body Corporate Schemes, while the CSOSA will assist with any disputes which may arise.
Below is a basic outline of what this new legislation means for you, as a Sectional Title owner or tenant:
- RESERVE FUND
Body Corporates are now required by law to establish a reserve fund to cover the cost of future maintenance and repairs to common property. The suggested amount for the reserve fund is 25% of the annual levy. So, for example, if the levies total R150 000,00 for the year, then the additional reserve amount to be collected from owners would be R37 500,00.
- NOTIFY THE OMBUD OF A DOMICILE
Body Corporates must provide the domicilium address to the Chief Ombud, local municipality, and local Registrar of Deeds so that in the event of cases being brought against a Body Corporate, there is one address to serve notices to.
- DECISIONS REQUIRE SPECIAL RESOLUTIONS
In future, Body Corporate will need a Special Resolution to make decisions such as the purchase, transfer, sale or letting of units. In cases where a special or unanimous resolution can’t be reached, the Chief Ombud can be approached to provide assistance.
- ASSISTANCE IN RECOVERING ARREAR LEVIES
Body Corporates can now request assistance form the regional ombud where trustees are struggling to recover payments from Sectional Title owners.
- CAP INTEREST ON LEVIES
Penalty interest on arrear levies may not exceed the maximum rate under the National Credit Act, currently 2% per month.
- NOTIFY CHANGES ON LEVY
Any changes in levy amounts must be notified to owners in writing.
- LIMIT PROXIES
No more multiple proxies per person. This new legislation limits the number of proxies held by a single Body Corporate member, to two.
- ASSIST WHERE THERE ARE DIFFERING MANAGEMENT OR CONDUCT RULES
The Chief Ombud must approve and certify all Body Corporate rules which have been substituted, added or charged.
- SAFE STORAGE AND DELIVERY OF MANAGEMENT AND CONDUCT RULES
Members who are new to a scheme must be kept well informed. All Body Corporate rules should be available to them, regardless of whether they are owners or tenants.
- SAFE TRACK OF OCCUPY CHANGES
The Body Corporate should always be notified of any change in ownership.
In order to be compliant with the above changes, your body Corporate needs to register the scheme with the CSOSA on/before the 30th of November 2016, and submit the Scheme’s governance documentation to the Omdud Service within 90 days.
The new legislation aims to improve and streamline the governance of your Body Corporate – a positive move forward to assist trustees, owners and tenants alike.
WVA – Wietz Viljoen
This article is for general information purposes and is aimed at advising the public. It should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.