The Sectional Titles Act, 1986 (Act no 95 of 1986) “provide for the division of buildings into sections and common property and for the acquisition of separate ownership in sections coupled with joint ownership in common property; the control of certain incidents attaching to separate ownership in sections and joint ownership in common property; the transfer of ownership of sections and the registration of sectional mortgage bonds over, and real rights in, sections; the conferring and registration of rights in, and the disposal of, common property; the establishment of bodies corporate to control common property and for that purpose to apply rules; and the establishment of a sectional titles regulation board; and to provide for incidental matters” (emphasis added).
The Sectional Titles Act (STA) consists of definitions, ten parts, a schedule, regulations and annexures, which include prescribed management and conduct rules of a scheme.
Section 39(1) of the STA, “Functions and powers of bodies corporate to be performed or exercised by trustees” is possibly the most important statement with regard to a newly elected trustee of a body corporate:
The functions and powers of the body corporate shall, subject to the provisions of this Act, the rules and any restriction imposed or direction given at a general meeting of the owners of sections, be performed and exercised by the trustees of the body corporate holding office in terms of the rules.
In addition to section 39, most of part VIII of the STA is important, namely:
· Section 35 deals with the rules of the sectional scheme
· Section 36 explains the body corporate as an entity, comprising all the owners
· Section 37, a very important section, elaborate the functions of the body corporate, performed by the trustees—it includes aspects, such as:
o funds for the repair, upkeep, control, management and administration of the common property (including reasonable provision for future maintenance and repairs), for the payment of local authority charges, for premiums of insurance, and for the discharge of any duty or fulfilment of any other obligation
o require the owners to make contributions to such fund—here understanding of section 32 (part VII) that explains the participation quota is important
o determining the amounts (levies) to be raised
o operate bank account/s of the body corporate
o keeping the buildings insured in terms of replacement values and risks, and pay premiums
o properly maintain the common property (including elevators) and to keep it in a state of good and serviceable repair
o comply with any notice or order by any competent authority requiring any repairs or work
o comply with any reasonable request for policies, documents, names and addresses and notify the registrar and the local authority concerned of its domicilium citandi et executandi
o ensure compliance with any law relating to the common property
o keep in a state of good and serviceable repair and properly maintain the plant, machinery, pipes, wires, cables, ducts, etc.
o in general, to control, manage and administer the common property for the benefit of all owners
· Section 38, deals with the powers of the trustees, on behalf of the body corporate:
o to appoint agents for proper fulfilment of the duties of the body corporate
o where practicable, to establish and maintain on the common property suitable lawns and gardens and recreation facilities
o to enter in agreement where necessary and invest surplus funds
o to do all things reasonably necessary for the enforcement of the rules and for the control, management and administration of the common property
· Section 40 deals with the fiduciary position of trustees and section 41 with proceedings by the trustees on behalf of bodies corporate
Part IX of the STA, namely ‘Owners, Administrators and Buildings’ is furthermore important:
· Section 44 deals with the ‘Duties of Owners’ with regard to permitting entry to her/his/their unit with regard to STA matters; carry out work ordered and pay all charges, expenses and assessments that may be payable in respect of her/his/their section; repair and maintain the section in a state of good repair and, in respect of an exclusive use area, keep it in a clean and neat condition; “use and enjoy the common property in such a manner as not unreasonably to interfere with the use and enjoyment thereof by other owners or other persons lawfully on the premises”; not use the “section or exclusive use area, or permit it to be used, in such a manner or for such purpose as shall cause a nuisance to any occupier of a section”; notify the body corporate of a change of ownership; use a section only for the purpose (e.g. residential) as shown on the registered sectional plan or obtain the permission of all owners for alternative use (e.g. running a business).
Annexure 8, the prescribed Management Rules, consists of 12 parts of which five deal with trustees:
· Part 6 deals with the meetings of trustees; quorum specifications; the chairperson; and voting
o Rule 15 stipulates any trustee may call a meeting, giving seven days notice—unless it is a matter of urgency; any owner may attend and speak, but may not vote; etc.
o Rule 16 specifies 50% of trustees present, but not less than two and Rule 17 that if not a quorum within the meeting is adjourned to the next day.
o Rule 18 specifies that the chairperson is elected at the first meeting of the trustees.
o Rules 22-24 specify that the trustees decide by consensus or majority vote; that a trustee may not vote if conflict of interest and that trustees may in writing agree to a proposal (i.e. it is not always necessary to convene a meeting).
· Part 7 deals with the signing (Rule 27)—by at least two trustees—and powers (Rule 26) of the trustees, namely to appoint or delegate.
· Part 8 deals with the duties of trustees, namely (Rule 28) statutory & general; (Rule 29) insurance; (Rules 30-31) levy collection; (Rule 32) records of the rules and availability; (Rule 33) restrictions regarding improvements; (Rule 34) keeping of minutes; (Rule 35) books, accounts and records; (Rule 36-39) financial statements and report at AGM; (Rule 40) financial audit; (Rules 41-44) deposit and investment of funds; (rule 45) no refund or distribution of surplus funds; and (Rules 46-49) appointment, powers and duties of a managing agent.
· Part 4 (Rule 4) deals with the Qualifications; appointment and election; tenure of office; remuneration; Indemnity; (Rule 5) qualifications; (Rule 6) election; (Rule 7) nominations; (Rule 8) vacancy in number; (Rule 9) alternative trustees; (Rule 10) no remuneration; (Rule 11) validity of acts; and (Rule 12) indemnity. The owners (body corporate) determine the number of trustees and elect persons to serve.
· Part 5 deals with the disqualification of trustees; (Rule 13) the removal from office and (Rule 14) the replacement of trustees.
Three parts deal with the democratic rights of owners, through meetings:
· Part 9 deals with the general meetings of owners; (Rules 50-53) specify when to hold and Rule 53 in particular the right of owners to ask for a meeting; and Rule 54 specifies the requirements regarding the notice of general meetings.
· Part 10 deals with the general meetings as such; Rule 55 differentiate between general and specific; Rule 56 specifies the prescribed business of the AGM; Rules 57-58 specify the quorum requirements and adjournment; and Rule 59 gives direction regarding the chairing of the meetings.
· Part 11 essentially deals with voting; Rules 60-61 with a poll versus by show of hands; Rules 62-63 the votes; Rule 64 with no vote if in arrears or persisted in breach of any of the conduct rules; Rule 65 the voting by ‘trustee of a beneficiary’; Rule 66 joint voters if the property is in the name of more than one person; and Rule 67 votes by proxies.
· The last part (12) focus on the duties of owners, with Rule 68 specifying seven items in addition to obligations in terms of section 44 of the Act, namely an owner shall:
o (i) not use his section, exclusive use area or any part of the common property, or permit it to be used, in such a manner or for such purpose as shall be injurious to the reputation of the building;
o (ii) not contravene, or permit the contravention, of any law, by-law, ordinance, proclamation or statutory regulation, or the conditions of any licence, relating to or affecting the occupation of the building or the common property, or the carrying on of business in the building, or so contravene or permit the contravention of the conditions of title applicable to his section or any other section or to his exclusive use area or any other exclusive use area;
o (iii) not make alterations which are likely to impair the stability of the building or the use and enjoyment of other sections, the common property or any exclusive use area;
o (iv) not do anything to his section or exclusive use area which is likely to prejudice the harmonious appearance of the building;
o (v) when the purpose for which an exclusive use area is intended to be used, is shown expressly or by implication on or by a registered sectional plan, not use, nor permit such exclusive use area to be used, for any other purpose: Provided that with the written consent of all owners such exclusive use area may be used for another purpose;
o (vi) not construct or place any structure or building improvement on his exclusive use area, without the prior written consent of the trustees, which shall not be unreasonably withheld;
o (vii) maintain the hot water installation which serves his section, or, where such installation serves more than one section, the owners concerned shall maintain such installation pro-rata, notwithstanding that such appliance is situated in part of the common property and is insured in terms of the policy taken out by the body corporate.
· Rule 69 clarifies the binding nature, namely “The provisions of these rules and of the conduct rules, and the duties of the owner in relation to the use and occupation of sections and common property shall be binding on the owner of any section and any lessee or other occupant of any section, and it shall be the duty of the owner to ensure compliance with the rules by his lessee or occupant, including employees, guests and any member of his family, his lessee or his occupant”.
· Rule 70 deals with an owners failure to maintain and specifies that if “any such failure persists for a period of thirty days after the giving of written notice to repair or maintain given by the trustees or the managing agent on their behalf, the body corporate shall be entitled to remedy the owner’s failure and to recover the reasonable cost of doing so from such owner”.
· Rule 71 deals with the determination by disputes through arbitration.
Annexure 8, the prescribed Conduct Rules, consists of 11 parts.