FREQUENTLY ASKED

Questions and Answers

LETTING & RENTALS

CAN I AS OWNER / LANDLORD INSPECT MY PROPERTY AT ANY TIME?

  • Unfortunately no. The Lease Agreement usually specify that inspections can only be confirmed by appointment and should also be done at “reasonable” time. If considered an EMERGENCY, then yes.

CAN I DISCONNECT ELECTRICITY SUPPLY IF MY TENANT DOES NOT PAY RENT?

  • Absolutely NO! Can only be done if owner / landlord obtained a legal court order to disconnect electricity.

CAN I RENT A PROPERTY IF I’M UNDER DEBT REVUE?

  • Yes you can, but certain additional conditions will apply. Posing a “RISK” for regular payment, the landlord may request a higher breakage deposit than usual, or expect rental payment in advance every two to three months, etc.

SHOULD I RENT OUT MY PROPERTY OR RATHER SELL?

  • This depends entirely on the owner’s personal circumstances. Considering to sell will depend on current market value, availability of prospective buyers, consideration of capital gains tax to be paid, how to re-invest returns, if some improvements needs to be done before marketing property and many more. Renting out the property may pose some risk such as non-payment of rental or possible damage to property – however, regular receipt of rent income can be more profitable than re-investment of return. A though decision to make……

WHY MUST I PAY A DEPOSIT AND WILL I GET IT BACK WHEN I VACATE THE PROPERTY?

  • Payment of a deposit is the landlord’s surety to cover arrear rent and/or possible damage to property. A deposit is indeed refundable when the property is vacated on condition that the property has not been damaged or rent due.

CAN I INSIST MY TENANT TO PAY FOR SECURITY?

  • Yes – if so agreed and included in the Lease Agreement.

INSURANCE

WHAT DOES INSURANCE IN SECTIONAL TITLE COVER?

  • Basically the structure and fixtures of the property. Insurance does not cover the content or movable assets of the occupant. Insurance on Sectional Title Properties must include:
    • * Replacement value of each unit, exclusive use area and common property
    • * Public liability, minimum R10 million
    • * Fidelity cover for operational and investment funds
    • * Risk against fire, lightning, riots, storm, hail & flood, earthquakes, impact by aircraft and vehicles and housebreaking.

NOTE:  Insurance does not cover normal maintenance, wear & tear or poor workmanship

WHY MUST I PAY AN EXCESS WHEN I CLAIM?

  • This obligation is clearly defined in the insurance policy.
  • Example:

Excess structure

    • * Accidental Damage = R2000
    • * All other claims = R1000
    • * All risk = R1000
    • * Employers Liability  = NIL
    • * Fidelity Guarantee = R1000
    • * Geyser 5% of claim, minimum =  R2500
    • * Impact by Road Vehicles = R1500
    • * Etc

 

  • * The excess structure may differ from policy to policy
  • * Prescribed Management Rule (PMR) 23 (2):

“A member is responsible –

  • * For payment of any additional premium on account of an increase in the replacement value referred to in sub-rule (1)(b)
  • * For any excess amount that relates to damage to any part of the buildings that member (owner) is obliged to repair and maintain in terms of the Act or these rules”

PMR 31 (1)

“Notwithstanding that a water-heating installation forms part of the common property and is insured by the body corporate, a member must maintain, repair and when necessary, replace such an installation which serve that member’s section or exclusive use area, provided that where such an installation serves sections owned or exclusive use areas held by more than one member, the members concerned must share the maintenance, repair and replacement costs on a pro-rata basis”

WHY CAN’T I APPOINT MY OWN CONTRACTOR?

  • Once again, this depends on the requirement of the insurance policy. Most underwriters insist on reporting claims to their preferred call centres who then appoint a contractor on their panel.

DOES EVERY OWNER PAY THE SAME EXCESS?

  • Yes! Strictly in accordance with the policy demand. If requested, a copy of the excess structure can be provided.

WHO IS RESPONSIBLE FOR DAMAGE SHOULD MY TENANT OR VISITOR DAMAGE THE GATE?

  • Unfortunately the owner! The owner is responsible for the conduct of his/her occupant.

MY CEILING AND CUPBOARDS WHERE DAMAGED DUE TO ROOF LEAKING. MUST I PAY FOR THESE DAMAGES?

  • No – The Body Corporate is responsible for maintenance and repair of common property, roofs being part of common property. Insurance indeed covers consequential or resulting damage on condition that the origin or “reason” for damage has been repaired.

MANAGING AGENT

HOW DO WE GET RID OF OUR CURRENT MANAGING AGENT

  • Carefully in order to void possible claim for damages. Usually the written Management Agreement specify the terms of termination – read it thoroughly. If no written Management Agreement exists, 30 days notice of termination can be served.

CAN TRUSTEES APPOINT A MANAGING AGENT WITHOUT APPROVAL OF MEMBERS?

  • Yes – Appointment of Managing Agent and employees is part and parcel of Trustees’ responsibilities unless Trustees where restricted or directed at the most recent Annual General Meeting regarding their powers to appoint.

WHY DO WE HAVE TO PAY MANAGEMENT FEES AND BANK CHARGES?

  • A Managing Agent is appointed to perform several services which include:
    • –  Collection of levies
    • –  Payment of expenditure
    • –  Preparation of agenda’s, notice of meetings, minutes and attendance of these meetings
    • –  Regular reporting to Trustees
    • –  Assistance with obtaining of quotations for repair, preparation of budgets, handling of insurance claims, etc
    • –  Expert advice to Trustees on Sectional Titles Schemes Management Act (STSM) and Community Schemes Ombud Service Act (CSOS) and any other legislation pertaining to proper management of their scheme.

These services are tendered at a cost called Management Fees and should be clearly defined in the approved Management Agreement.

WHY DO WE PAY FOR PRINTING OR EMAILS? SHOULD THIS NOT BE INCLUDED IN THE MANAGEMENT FEE?

  • This is determined per agreement on appointment of a Managing Agent. The Managing Agent can either charge a fixed fee for delivery of basic services plus costs for additional services

OR

an all inclusive fee which includes all additional costs – purely as agreed upon by all parties concerned.

ACCOUNTS

EXPLAIN THE EXTRA CHARGES ON MY ACCOUNT?

  • Accounts may be charged differently from scheme to scheme. Additional charges, over and above the normal levy, may or must include:
    • –  Interest on arrear accounts
    • –  CSOS contributions
    • –  Rental of additional parking or storeroom
    • –  Costs relating to recovery of arrears
    • –  Excess payment on insurance claims
    • –  Electricity, water & sanitation consumption, etc

HOW ARE LEVIES CALCULATED?

  • In accordance with the participation quota of each unit. Participation Quota (PQ) is a percentage of the size of a unit in relation to the total of all units.

WHY DO I HAVE TO PAY LEVIES?

  • Function of a body corporate is to establish and maintain an administrative fund which is reasonably sufficient to cover the estimated operating costs of:
    • –  Repair, maintenance, management and administration of common property
    • –  For payment of local municipal charges
    • –  For payment of insurance premium
    • –  Payment of salaries & wages, etc
  • An operational budget is prepared annually to cover such expenses. On approval of the budget, levies are calculated per PQ to cover the mentioned expenditure.

WHAT IS CSOS AND WHY DO I HAVE TO PAY FOR IT?

  • Community Schemes Ombud Service (CSOS) is a body established by the government to which all community schemes (full title, sectional title, retirement villages, etc) must report to. Their function is to resolve disputes, provide training, to regulate and monitor and control the quality of all sectional title scheme governance documentation and to take custody of, preserve and provide public access to sectional title scheme governance documentation. A monthly contribution is payable to CSOS according to Act 9 of 2011.

DOES LEVIES INCLUDE VAT ?

  • NO – no VAT is payable on levies

WHY DO I HAVE TO PAY LEGAL COSTS?

  • PMR 25(2) confirms an owner’s responsibility to pay interest in respect of overdue contributions as well as all reasonable legal costs and disbursements, as taxed or agreed by the members, incurred by the body corporate in the collection of arrear contributions or any other arrear amounts due and owing by such a member to the body corporate OR in enforcing compliance with the Rules or Act

GENERAL

WHO MAKES THE RULES?

  • Management Rules or referred to as Prescribed Management Rules (PMR) are enforced by Annexure 1 to the STSM Act 8 of 2011 and applies to all sectional title schemes. PMR can be changed or amended to by an unanimous resolution of members

 

  • Conduct Rules or referred to as CR are enforced by Annexure 2 to the STSM Act. Conduct Rules can be changed or amended to by a special resolution of members.

WHO IS IN CHARGE OF COMMON PROPERTY (CP)

  • Trustees – although each owner owes an undivided share in Common Property. Trustees, appointed to carry out the powers and functions of a body corporate must:
    • * Maintain all the Common Property and keep it in a state of good and serviceable repair
    • * Ensure compliance with any law relating to Common Property or to any improvement of land comprised in the Common Property
    • * In general, to control, manage and administer the Common Property for the benefit all owners

WHY MUST WE HAVE A RESERVE FUND?

  • A reserve fund, calculated at at least 25% of the annual, operational budget is used for maintenance, repair and replacement plan of the body corporate. Each body corporate must have a 10-year-maintenance plan as described in Prescribed Management Rule 22

Subscribe to our Newsletter...