Sectional Title Schemes Now Under New Management: How will the changes affect me?

BY BARDINE HALL (BA LIB) - GOLDBERG & DE VILLIERS - NOVEMBER 22, 2016

The Sectional Title Schemes Management Act, 2011, (“the Scheme Management Act”), the Community Services Ombud Act, 2011, and the regulations under these laws came into operation on 7 October 2016.

The management of sectional title schemes will now be regulated by the Scheme Management Act.

The Scheme Management Act repeals the provisions of the Sectional Titles Act that previously regulated the management of sectional title schemes and replaces these provisions. Most of the former provisions of the Sectional Titles Act are replicated in the Scheme Management Act but a few significant changes are introduced.

The changes include the following:

Changes to the standard management and conduct rules

Changes to the standard management and conduct rules (“the rules”) must be approved by the Community Services Ombud established in terms of the Community Services Ombud Act.

Nature of rules

The rules must be interpreted as laws issued by the body corporate.

Recourse to Ombud

The Community Services Ombud Act makes provision for residents of sectional title schemes and home owners’ associations to refer disputes relating to the administration of a scheme including disputes regarding the finances of the body corporate, complaints about the conduct of other owners, and decisions of the trustees to the Ombud for resolution through conciliation. If conciliation fails the Ombud must adjudicate the dispute.

Body corporates and home owners’ associations must pay levies to the Ombud. This is likely to impact on levies paid by members of sectional title schemes and home owners associations. Fees will also be payable if a dispute is referred to the Ombud.

Additional reserve fund

A body corporate is required to set aside a minimum amount in a reserve fund to provide for future maintenance and repairs to common property. This is also likely to increase levies collected from owners.

Additional insurance

The body corporate must now also take out insurance to cover the risk of loss of funds due to theft and dishonesty by a trustee, agent or employee of the body corporate. An increase in levies collected from owners is likely.

Although the initial increases in levies will be felt by many, the long term benefits of having a reserve fund in place and recourse to an Ombud will hopefully outweigh the initial financial crunch.

At Goldberg & de Villiers Inc, the Directors in our Property Law Department, namely Adri Ludorf, Tracey Watson-Gill and Nicolas Mitchell, assisted by Bardine Hall and a  team of highly-qualified paralegals, will gladly assist you with any of your Sectional Title  or Property Law-related needs. 

Contact Adri Ludorf or Tracey Watson-Gill or Nicholas Mitchell on 041 501 9800 [email protected]  • [email protected]   •  [email protected]