Decision-making within a Sectional Title Scheme

When you become an owner in a Sectional Title scheme, you automatically, enter into relationships and you might be required to be part of the decision-making process.

Some of these decisions will affect what you can do with your property. How you can use and enjoy your home. Buying into a scheme typically involves a trade-off between the type of home we wish we could have and what we can afford. Where we want to live as well as what’s available on the market.

In an ideal world, anyone would buy in a scheme that is well run, financially sound and one that has no major structural defects or maintenance issues. However many prospective purchasers have only the faintest idea what Sectional Title ownership really involves.

As well as the restraints and obligations it imposes. It is after one move in that you wish you had conducted thorough research of what you were buying into.

“The Sectional Titles Act (STA) of 1986 defines the rights and obligations of the various stakeholders who bring a Sectional Title scheme into being, and who manage and live in it.

These rights and obligations are also set out in the Prescribed Management Rules (PMRs) and the Prescribed Conduct Rules, B issued under the Act. Many people do not know the extent to which what can and cannot be done in a Sectional Title scheme.

According to a Sectional Title Agent when you take transfer of a Sectional Title unit, you instantly become a member of the Body Corporate. The Body Corporate consists of all the owners of units in the scheme.

The Body Corporate meets at least once a year as it must transact certain mandatory business that includes adopting a budget and electing Trustees. If necessary special general meetings can be arranged to discuss issues that need to be resolved.

Body Corporate decisions require a majority vote. However some many require higher level of consensus, according to research data, it includes,

Ordinary resolutions.- Decisions that can be made by passing an ordinary resolution with a simple majority include approving the budget, electing or removing Trustees, and imposing specific restrictions or directions on the Trustees.

Special resolutions – A special resolution requires the consent of 75 percent of the owners. Some of the decisions that must be made by a special resolution are amending the conduct rules, suing the developer of the scheme; authorising “non-luxurious” improvements etc.

Unanimous resolutions- A unanimous resolution requires a quorum of 80 percent of the owners and no votes against the resolution (abstentions are counted as votes in favour). Other decisions that require a unanimous resolution include alienating or leasing part or all of the common property and making “luxurious” improvements to the common property.

In order for some resolutions to be made in a general meeting, some decisions require the written consent of owners is a requirement. It is vital that you obtain a copy of the management and conduct rules before you buy into a Sectional Title scheme.

Trustees enforce all the duties and responsibilities of the Body Corporate and they are responsible for the day-to-day management. The Trustees are accountable to the Body Corporate and have the authority to make a number of decisions without reference to the owners unless a resolution restricting their powers has been passed.

Decisions that can be done by the Trustees are appointing a managing agent, approving the consolidation of subdivision of sections, imposing fines for contraventions of the conduct rules etc.

A majority of Trustees are members of the Body Corporate and they volunteer their services and time. If you want to be involved in the management and if you want to safeguard your investment, you might just have to volunteer and become a Trustee.