SECTIONAL TITLE
1. WHAT EXACTLY IS SECTIONAL TITLE, AND WHAT DO I OWN?
In practical terms, a section is usually a flat or townhouse, but may also be a garage, domestic staff room or external storeroom. It can include an open area or an adjoining area e.g. balcony or garage and is shown on the Sectional Title plans by solid lines. The owner is responsible for maintaining and repairing the inside of the section and the hot water system serving the section regardless of whether the system is in the section or not. The outer frame of the section is maintained by the Body Corporate.
2. WHAT AM I INSURED FOR?
Your sectional title policy covers any loss or damage caused to the structure (building) and any of its standard fixtures and fittings in your unit, as a result of an insured, sudden and unforeseen event e.g. lightning, storm, wind, water and fire damage. In general, any insured damage caused to the building or fixtures (if you turn the unit upside down, everything that stays attached is usually considered a fixture e.g. ceiling, walls, wall to wall carpeting, doors, built-in cupboards) may be covered by the insurer. You may declare nonstandard improvements to your insurer, this may include solar panels, solar geysers, heat pumps, air conditioning, laminated wooden flooring, thatch roof lapa, wendy houses, garage door motors etc.
3. WHAT IS COMMON PROPERTY?
All building/s that do not form part of any section, including the land in the scheme are common property. Common Property is jointly owned by all those who own sections. Driveways, gardens, swimming pools, corridors, lifts, entrance foyers, parking bays, outer walls, outer windows, doors, foundations, the outside of the section and the roof are all part of the common property. As mentioned above, some parts of the common property are designated as exclusive use areas. Each owner has an undivided share in the common property. Owners are entitled to use all areas of the common property not reserved for the use of others (exclusive or private use). All use of common property must be reasonable and consideration of others must always be given.
4. WHAT IS PARTICIPATION QUOTA (Pq)?
Every unit owner of a section also owns a share in the common property. The PQ determines the individual owners share in the common property and is established from the ratio of the area of an individual section to the area of all the sections combined. It is used to determine the value of an owners vote and the amount to be contributed by payment of the levy. Exclusive use areas are always excluded from the calculation of the PQ.
Example: A 100m2 section in a Scheme
comprising 4000m2 (the total square meterage
of all the sections added together) would have
a PQ of 2.5% or 0.025 which is calculated as
follows:
100 / 4000 = 0.025. This would comprise the share of levies payable by the section
owner and the value of the section owners vote at general meetings.
Example: A 100m2 section in a Scheme
comprising 4000m2 (the total square meterage
of all the sections added together) would have
a PQ of 2.5% or 0.025 which is calculated as
follows:
100 / 4000 = 0.025. This would comprise the share of levies payable by the section
owner and the value of the section owners vote at general meetings.
5. WHO ARE THE TRUSTEES?
The Trustees are usually, but not necessarily, owners of units in a scheme who have been
entrusted with the task of looking after the scheme on a day-to-day basis. Trustees are
appointed by the Body Corporate at an AGM and usually hold office until the next AGM. The
Managing Agent, members of his/her staff or an employee of the Body Corporate may not be a Trustee unless he/or she is an owner. Trustees work on a voluntary, unpaid basis. All Trustees are, of course, entitled to be reimbursed for all legitimate costs incurred by them in
execution of their duties. At the first meeting of the Trustees after being appointed, the Trustees elect a Chairperson who holds office until the next AGM but can be replaced by the other Trustees during his or her term of office.
entrusted with the task of looking after the scheme on a day-to-day basis. Trustees are
appointed by the Body Corporate at an AGM and usually hold office until the next AGM. The
Managing Agent, members of his/her staff or an employee of the Body Corporate may not be a Trustee unless he/or she is an owner. Trustees work on a voluntary, unpaid basis. All Trustees are, of course, entitled to be reimbursed for all legitimate costs incurred by them in
execution of their duties. At the first meeting of the Trustees after being appointed, the Trustees elect a Chairperson who holds office until the next AGM but can be replaced by the other Trustees during his or her term of office.
6. WHO MAKES THE RULES?
At the inception of a scheme, Management and Conduct Rules are established. These rules form Annexures 1 and 2 of the Sectional Titles Schemes Management Act and may be amended by the developer before the register is opened. As their names infer, the management rules control the running or management of the scheme, while the conduct rules lay down guidelines for the conduct or behavior of owners and occupiers and their guests or tenants.
7. WHAT IS THE DIFFERENCE BETWEEN ADMINISTRATIVE AND RESERVE FUND LEVY?
Administrative Levy: The costs incurred in running a scheme have to be paid by the Body Corporate.
These costs include:
- Auditors fees & administration charges Bank charges
- Refuse removal, water & sanitation
- Security & gardening services
- Electricity (common property)
- Maintenance of building (exterior)
- Lift Maintenance (if applicable)
- Insurance of the building and common property (only fixtures)
- Managing Agent costs
- Salaries/Wages (if applicable)
Reserve Fund Levy: Contributions collected from owners to build up and maintain a fund for future maintenance, repairs, and replacement of the common property and assets of the scheme. This includes planned, major, and capital expenditure to ensure the long-term sustainability of the scheme.
The reserve fund covers non-routine and long-term expenses, such as:
- Repainting of buildings
- Roof repairs or replacement
- Road resurfacing and paving
- Replacement of lifts or major equipment
- Boundary walls, fencing, or security upgrades
- Major plumbing or electrical infrastructure repairs
These costs include:
- Auditors fees & administration charges Bank charges
- Refuse removal, water & sanitation
- Security & gardening services
- Electricity (common property)
- Maintenance of building (exterior)
- Lift Maintenance (if applicable)
- Insurance of the building and common property (only fixtures)
- Managing Agent costs
- Salaries/Wages (if applicable)
Reserve Fund Levy: Contributions collected from owners to build up and maintain a fund for future maintenance, repairs, and replacement of the common property and assets of the scheme. This includes planned, major, and capital expenditure to ensure the long-term sustainability of the scheme.
The reserve fund covers non-routine and long-term expenses, such as:
- Repainting of buildings
- Roof repairs or replacement
- Road resurfacing and paving
- Replacement of lifts or major equipment
- Boundary walls, fencing, or security upgrades
- Major plumbing or electrical infrastructure repairs
8. WHAT ARE THE RULES REGARDING PETS?
It is not surprising that permission to keep a pet is covered by the very first rule (Rule 1) of the conduct rules, as much unhappiness and heartache have been caused by a failure to understand this rule. An occupant of a Sectional Title unit may not keep a pet in a scheme without the written consent of the Trustees, which consent the Trustees may not refuse without good reason. In considering an application, the Trustees have to be guided by the type of pet and the nature of the scheme. In granting consent Trustees may impose special conditions and may withdraw the consent if the pet causes a nuisance to other owners. Emotions run high when it comes to pets! Please note that often a Body Corporate will, by Special Resolution, amend conduct rule 1 and ban all or certain types of pets.
9. WHAT IS REQUIRED WHEN I SELL MY UNIT?
You must notify the Body Corporate that you are selling your unit, as a clearance certificate is required. Please note that the Act requires an owner of a Sectional Title unit to notify the Body Corporate of any change in the status of bond registered over the unit, such as the registration of a second bond, or cancellation of an existing bond.
10. MAY I RENT MY UNIT TO A TENANT?
Yes, but as an owner of the unit, you remain a member of the Body Corporate and are responsible for payment of the levy. You are also responsible for the conduct of your tenant, so you must furnish your tenant with a copy of the Rules. You are required to notify the Body Corporate that a unit is being rented to a tenant.
11. CAN THE CHAIRMAN OF TRUSTEES SPEND BODY CORPORATE MONEY WITHOUT THE OTHER TRUSTEES AGREEING?
No. A Chairperson cannot unilaterally decide to spend Body Corporate funds. Decisions relating to expenditure must be approved by a majority of the Trustees at a properly constituted Trustee meeting or by round robin resolution.
Where Trustees are unable to reach agreement, and there is a deadlock, the Chairperson may exercise a casting vote. This power should be exercised cautiously and in the best interests of the Body Corporate, with consideration given to referring significant or contentious matters to the owners for decision.
The Trustees may, however, delegate authority to the Chairperson for a specific item, project, or category of expenditure, and up to a specified amount. This delegation should be formally approved by the Trustees and properly recorded in the meeting minutes or resolution.
Where Trustees are unable to reach agreement, and there is a deadlock, the Chairperson may exercise a casting vote. This power should be exercised cautiously and in the best interests of the Body Corporate, with consideration given to referring significant or contentious matters to the owners for decision.
The Trustees may, however, delegate authority to the Chairperson for a specific item, project, or category of expenditure, and up to a specified amount. This delegation should be formally approved by the Trustees and properly recorded in the meeting minutes or resolution.
12. THE DEVELOPER STILL OWNS SEVERAL UNITS AND IS NOT PAYING LEVIES ON THE UNOCCUPIED UNITS. DOES THE DEVELOPER STILL HAVE TO PAY LEVIES?
Yes. The developer is liable for the full levies raised on all units that remain registered in the developer’s name, regardless of whether the units are occupied, vacant, rented out, or unsold.
When the sectional title register is opened for a scheme or phase of a development, the developer becomes a member of the Body Corporate in respect of all units registered in the developer’s name. The developer therefore has the same rights and obligations as any other registered owner, including the obligation to pay levies, special levies, and any other contributions lawfully raised by the Body Corporate.
When the sectional title register is opened for a scheme or phase of a development, the developer becomes a member of the Body Corporate in respect of all units registered in the developer’s name. The developer therefore has the same rights and obligations as any other registered owner, including the obligation to pay levies, special levies, and any other contributions lawfully raised by the Body Corporate.
13. the developer has just transferred the last unit in our development to its new owner. he has kept ten exclusives use parking bays to sell "when the time is right". until then, he is renting them to owners. Can he do that?
No. Section 27(1)(c) of the Sectional Titles Act requires all exclusives use areas in the developer's name to be ceded free of charge to the Body Corporate by the developer when the last section is transferred.
14. how many proxies may one member hold at member meetings?
In terms of section 6(5) of the Sectional Titles Schemes Management Act, a person may not act as a proxy for more than two members at a general meeting.
15. may the caretaker hold proxies for owners at member meetings?
No. In terms of prescribed management rule 20(6) of the Sectional Titles Schemes Management Act, a proxy holder need not be a member of the Body Corporate, but may not be the managing agent, an employee of the managing agent, or an employee of the Body Corporate.
Accordingly, a caretaker employed by the Body Corporate or managing agent may not hold proxies for owners at member meetings.
Accordingly, a caretaker employed by the Body Corporate or managing agent may not hold proxies for owners at member meetings.
16. during a storm the roof above my duplex townhouse lost a few tiles and part of my bedroom ceiling collapsed. the trustees have agreed that the roof repair is a body corporate responsibility. who is responsible for the ceiling damage?
The roof forms part of the common property and its maintenance and repair is generally the responsibility of the Body Corporate.
However, where the ceiling damage was caused by a storm or other insured peril, the damage would ordinarily be dealt with in terms of the Body Corporate’s insurance policy. In most cases, the owner would be responsible for payment of the insurance excess, as the damage resulted from an unforeseen event or “act of God” that was outside the control of the Body Corporate.
If, however, the damage arose due to the Body Corporate’s failure to properly maintain the common property, different considerations may apply.
However, where the ceiling damage was caused by a storm or other insured peril, the damage would ordinarily be dealt with in terms of the Body Corporate’s insurance policy. In most cases, the owner would be responsible for payment of the insurance excess, as the damage resulted from an unforeseen event or “act of God” that was outside the control of the Body Corporate.
If, however, the damage arose due to the Body Corporate’s failure to properly maintain the common property, different considerations may apply.
17. Can trustees invest the body corporate's reserve funds to earn a better return?
Yes, but only in a prudent and low-risk manner. In terms of the Prescribed Management Rules, Body Corporate funds must be invested in an account with a registered credit provider, and Trustees must administer and invest those funds reasonably and prudently, having regard to the cash requirements of the Body Corporate.
Trustees should not place reserve funds in speculative or high-risk investments in an attempt to achieve higher returns. The primary purpose of reserve funds is to ensure that money is available for future maintenance, repairs, and other obligations of the Body Corporate. The preservation and accessibility of the funds should therefore take precedence over maximising investment returns.
Trustees should not place reserve funds in speculative or high-risk investments in an attempt to achieve higher returns. The primary purpose of reserve funds is to ensure that money is available for future maintenance, repairs, and other obligations of the Body Corporate. The preservation and accessibility of the funds should therefore take precedence over maximising investment returns.
18. OUR MANAGING AGENT OPERATES A TRUST ACCOUNT. IS IT ACCEPTABLE FOR THE BODY CORPORATE'S MONEY TO BE HELD IN THAT ACCOUNT?
Yes. The Sectional Titles Schemes Management Act and Prescribed Management Rules permit a managing agent to receive and administer Body Corporate funds. Where a managing agent holds scheme funds, those monies must be kept separate from the managing agent's own funds, typically through the use of a trust account, opened in terms of either the Estate Agency Affairs Act, 1976 (Act No. 112 of 1976), or the Attorneys Act, 1979 (Act No. 53 of 1979).
The Trustees remain responsible for overseeing the finances of the Body Corporate and should ensure that appropriate financial controls, reporting, and record-keeping are in place.
The Trustees remain responsible for overseeing the finances of the Body Corporate and should ensure that appropriate financial controls, reporting, and record-keeping are in place.
19. Why is there an agenda item at every agm for directions or restrictions on trustees?
This item allows members to place limits on the powers of the Trustees or to give them specific instructions regarding the management of the scheme.
Members may, for example, restrict the amount that Trustees can spend on a particular project without first obtaining owner approval, require Trustees to obtain member approval before undertaking certain actions, or direct the Trustees to investigate and report on matters affecting the scheme.
Although the item is often overlooked at AGMs, it provides owners with an important opportunity to influence how the scheme is governed and to ensure that Trustees act within parameters that the members consider appropriate. Where no directions or restrictions are proposed by the members, the item is simply noted and no further action is required.
This agenda item serves as an important reminder that while Trustees manage the day-to-day affairs of the Body Corporate, they remain accountable to the members who elected them.
Members may, for example, restrict the amount that Trustees can spend on a particular project without first obtaining owner approval, require Trustees to obtain member approval before undertaking certain actions, or direct the Trustees to investigate and report on matters affecting the scheme.
Although the item is often overlooked at AGMs, it provides owners with an important opportunity to influence how the scheme is governed and to ensure that Trustees act within parameters that the members consider appropriate. Where no directions or restrictions are proposed by the members, the item is simply noted and no further action is required.
This agenda item serves as an important reminder that while Trustees manage the day-to-day affairs of the Body Corporate, they remain accountable to the members who elected them.
20. may a trustee appoint a proxy to attend and vote at a trustee meeting?
No. A Trustee must personally attend and participate in Trustee meetings. Unlike members' meetings, the Prescribed Management Rules do not permit Trustees to appoint proxies to attend or vote on their behalf at Trustee meetings.
21. WHAT CONSTITUES A QUORUM AT A GENERAL MEETING OF THE BODY cORPORATE?
The quorum requirements for a general meeting are set out in Prescribed Management Rule 19. The required quorum is calculated in value and is:
In addition, at least two persons must be present or represented at the meeting, unless all sections in the scheme are owned by a single person.
When calculating whether a quorum exists, the value of votes held by the developer and any sections registered in the name of the Body Corporate are disregarded.
If a quorum is not present, the meeting may not transact business and must proceed in accordance with the provisions relating to adjourned meetings.
A primary section is a section designed principally for human occupation, such as a residence, office, shop, or factory.
- In a scheme with fewer than four primary sections, or a Body Corporate with fewer than four members, a quorum consists of members entitled to vote and holding at least two-thirds of the total value of votes.
- In all other schemes, a quorum consists of members entitled to vote and holding at least one-third of the total value of votes.
In addition, at least two persons must be present or represented at the meeting, unless all sections in the scheme are owned by a single person.
When calculating whether a quorum exists, the value of votes held by the developer and any sections registered in the name of the Body Corporate are disregarded.
If a quorum is not present, the meeting may not transact business and must proceed in accordance with the provisions relating to adjourned meetings.
A primary section is a section designed principally for human occupation, such as a residence, office, shop, or factory.
GOT A QUESTION?
Need a little more clarity? We’re here to help you navigate the details. We would love to hear from you.
|
|
River Falls Office Park
262 Rose Avenue Doringkloof Pretoria 0157 Tel: +27 (0) 12 001 9000 [email protected] Private Bag x115, Centurion 0046 |