WHAT IS A SECTIONAL TITLE
“Sectional title” describes separate ownership of units or sections within a complex or development. When you buy into a sectional title complex, you purchase a section or sections and an undivided share of the common property. These are collectively known as units.
WHICH ACT COVERS SECTIONAL TITLE SCHEMES
In the past, the Sectional Titles Act 95 of 1986 (“STA”) together with its annexures govern any Sectional Title Scheme.
However, very recently our President signed into operation two new acts namely the Sectional Title Scheme Management Act 8 of 2011 (“STSM”) and the Community Scheme Ombud Service Act 9 of 2011 (“CSOS”).
These acts will come into full operation as from 1 October 2016.
The STSM Act does not repeal the Sectional Titles Act (“STA”) 95 of 1986 (as amended) but only certain provisions of the STA have been repealed and/or amended, with the enactment of STSM Act.
WHO IS LIABLE FOR MAINTENANCE
The maintenance of sectional unit is by no means straightforward and is unfortunately the subject of many disputes.
Generally there are classes of sectional property namely unregulated common property, the sections, and portions of the common property that are subject to rights such as exclusive use by one or more owners in the scheme.
The STA and the STSM Acts place the responsibility for the maintenance of the common property squarely on the body corporate. This responsibility is both operational and financial.
The body corporate must arrange for the maintenance and upkeep of these areas and must carry the costs of any such maintenance.
However, as normal there exceptions to apply. Hot water systems that are situated in or on the common property and that serve one or more sections are the responsibility of the owners of the sections supplied with hot water from those installations.
Owners remain liable and must maintain their own sections. This is a more onerous responsibility in a sectional title scheme than in conventional property (for example, a suburban house) because a lack of maintenance could negatively affect another section, the common property or the appearance of the scheme from the outside.
The owner who failed to adequately maintain his or her section is responsible for any consequential damage to the other parts of the scheme.
Again the exception to the general rule: The body corporate is responsible for the maintenance of any “pipes, wires, cables and ducts” in a section that also serves any other section or the common property.
An owner who enjoys rights of exclusive use over some portion of the common property must keep that “exclusive use area” clean and neat.
This is one concept often misunderstood!
Exclusive use areas remain common property, owned by all the owners in the scheme in undivided shares, and are thus the responsibility of the body corporate to maintain.
However, the Acts makes it plain that all the costs associated with exclusive use areas must be recovered from the owners who hold the rights of exclusive use to those areas. In other words, the body corporate remain operationally responsible and the owners concerned financially.
WHAT IS THE DIFFERENCE BETWEEN SECTIONAL TITLE AND HOME OWNERS ASSOCIATIONS
In a home owners association (“HOA”) you own the house and the erf it is built upon. Each unit has its own erf number and each owner is responsible for his/her own rates and taxes, insurance, maintenance, as well as water, sanitation and electricity.
In a sectional title scheme you own the unit, but not the erf it is build on as this is generally considered to be common property. You do not have a separate erf number and the maintenance are generally divided between the various members of the scheme as herein explained.
This is most probably the most interesting part of a sectional title scheme.
In general levies are the finances that a Body Corporate requires in order to maintain and keep in good repair the common property especially areas such as the fences, gate and boundary walls.
Levies are calculated on a participation quota (PQ) which are clearly described in the relevant Acts. During the annual general meeting (AGM) a budget is prepared and are the relevant levies calculated based on the PQ.
Special levies are levies which need to be raised in addition to any expenses which have been budgeted for in terms of the AGM, and in normally brought into operation by means of a resolution passed by the board of trustees in terms of the Acts.
COLLECTION OF ARREAR LEVIES
This is where the headaches start for any trustee and managing agent.
The bottom line is that levies remain crucial for any Body Corporate and each member’s investment. Without levies, nothing can be maintained and may your investment lose value.
However, we all know the one or two members who just refuse to pay! What must be done?
The STA allowed the trustees to collect arrear levies by merely handing the owner to an Attorney who generally instituted legal proceedings in the Magistrates, Regional or High Court (depending on the monetary values – See our litigation department notes).
However, the legal process remains time-consuming and in some instance very costly.
The STSM Act read together with the CSOS Act has introduced some interesting changes.
In terms of these Acts, a Body Corporate may now approach the Ombud in the event that an owner is and remain in arrears with his levy contributions. Once the Ombud has made an order, the relevant Court must be approached to confirm the order and issue a warrant of execution to be executed against the owner.
The problem is that many Attorneys manage to obtain judgment against the defaulting member, but struggle to attach any movable assets to be sold to satisfy the judgment debt. In short, although it may appear on face value that the new Acts may speed up the collection process, the reality is that it wouldn’t.
What is furthermore concerning is that the Body Corporate may not be represented by a legal Counsel except in certain circumstance. In short, collecting arrear levies, except in exceptional circumstance, will now fall upon the Trustees and the managing agent, for at least the initial part.
However, Richards Attorneys have put means in place to circumvent this situation and do we invite you to contact us in this regard.
As the new Acts only came into operation on 1 October 2016, it is understandable that our courts have not yet made any decision and will it remain interesting to see how our Courts will interpret various of the new legislation.
SPECIAL and UNANIMOUS RESOLUTIONS
As a last comment, we need to define the above-mentioned resolutions as we often are required to provide guidance in this regard.
A special resolution as defined by the STSM Act means a resolution; (1) passed by at least 75% calculated in value and in number, of the votes for the members of the Body Corporate who are present at a general meeting; or (2) agreed to in writing by members of a Body Corporate holding at least 75% calculated both in value and in number, of all the votes.
A unanimous resolution means a resolution (1) passed unanimously by all the members of the Body Corporate at a meeting which at least 80% calculated in both value and in number, of the votes of all the members of the Body Corporate present or represented; and all the members who cast their votes do so in favor of the resolution; or (2) agreed to in writing by all the members of the Body Corporate.
We invite you to contact us in the event of any further information as Sectional Title living will remain a very interesting part of your life.