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.

Gated Estate vs. Property Tycoon Court Case Results

A property kingpin from Mount Edgecombe housing estate in Durban recently lost his legal contest to overthrow what he refers to as “draconian rules” that involve speed limits, access for domestic workers and contractors.

The property tycoon who is a resident at the estate argued and stated that the roads within the estate were public property governed by the National Road Traffic Act. He said that the general speed limit would be 60km/h, not 40km/h as it is on the estate.

However the judge refused this submission, stating that the rules were private/internal and that there were placed for ensuring a lower speed limit within the gated community, taking into consideration, animals, pedestrians and children.

Rules for domestic workers and contractors similarly were prescribed to ensure, orderly ingress and egress of a number of people that work at the homes in the estate.

The judge noted, “Rules are there to regulate conduct between neighbours and as necessity, must be restrictive to take into account the cumulative rights of the use and enjoyment of the estate by all its residents.”

He added, “Rules might irk one’s individual sense of propriety and fairness because of their restrictive and regimented nature, they cannot be said to be contrary to public policy.”

The judgment embedded the rights for homeowner associations that are on gated estates to enforce laws for that promote good community living.

With regards to property investors challenge in regards to the restriction for the use of accredited contractors approved by the association, the judge said it was not unreasonable to ensure that those doing the work were competent. “I see no reason why there cannot be a list of accredited service providers. The rules do not provide for a closed list and the association says when an owner wishes to use a contractor not already on the list, he can apply and as long as the contractor is suitable, accreditation will be granted.”

A home owners association comment to the matter; “This will clearly set the precedent for any future court cases within South African courts. Home owners associations do have power over residents who think they are on top of the law.”

What happens when your Conduct Rules are lost?

With the responsibility of running a Sectional Title Scheme, come the nitty gritty regulations or Conduct Rules of the Sectional Titles Act, Annexure 9 of 1986. Now although these conduct rules may not suit everyone, they are without question of great importance. This gives everyone the very basic guidelines of behaviour to adhere to within the Sectional Title Scheme. In other words: What is allowed and what is not allowed. Although it may appear laborious to know these, it will be of benefit to everyone when they understand what’s been penned in black and white. Continue reading “What happens when your Conduct Rules are lost?”

2014 Property Tips

With the property market looking healthy in 2014, we are excited to wish you all a prosperous and wonderful New Year.

What better way to kick off your new year than starting afresh in a new home. Purchasing a new home is not merely a physical experience, but an intensely emotional and psychological journey that may extend beyond just you – to include your entire family. Hence, the latest in property news sees us kick off 2014 with some helpful hints that will empower you as the home buyer. Continue reading “2014 Property Tips”