Sectional Title Living

Local authority billing deviates from naming protocol of sectional titles schemes

Why does the City of Johannesburg billing and adminstration not adhere to section 36(3) of the Sectional Titles Act, 95 of 1986 (as amended), which states:

The body corporate shall be designated as 'the Body Corporate of the ...............................(name)............................Scheme, No ..............., such name and number to be inserted being the name and number referred to in sections 5 (3) (b) and 12 (1) (a), respectively.

The Roodepoort Record reports [Download Roodepoort Record 1 July 2011 pp1+2 CoJ Billing Mess] on billing drama pertaining to, among others, misnaming a specific sectional title scheme. Section 12(1)(a) of the Sectional Titles Act indicates that the Deeds Registrar shall "register the sectional plan and allot a distinctive number to it", which is the subsequent number to the last registered in a particular year at the Deeds Office concerned. For example, the first scheme registered in 2011 would have been Name XXX (SS 1 / 2011).

Section 2(4) of the new Sectional Titles Scheme Management Act, No 8 of 2011, reiterate the above by stating: “The body corporate must be designated as the ‘‘Body Corporate’’ and must have the name and number contemplated in sections 5(3)(b) and 12(1)(a) of the Sectional Titles Act, respectively”.

Surely the local authory billing management ought to know this. Simple liaison with the Deeds Office would ensure correct billing.

My responsibilities as landlord within a sectional title scheme

It is the duty of an owner of a section within a sectional title scheme to ensure compliance of her/his tenants with the management and conduct rules of the scheme concerned. I have done a blog post about landlords/ladies and tenants elsewhere [http://psychsoma.co.za/all_the_single_ladies/2009/10/my-rights-and-my-landlords-rights-when-renting.html#tp] detailing, among others, the importance of the lease agreement. The owner must make sure the tenant understands and adheres to the scheme's rules.

Absentee-minded sectional title ownership

Absentee means "a person who absents himself or herself, as a landowner who does not live on certain property owned". Minded means "having a certain kind of mind; inclined to or pay attention to".

Sayed Iqbal Mohamed identifies three types or catgories of absentee owners. However, there is a fourth, the resident, self-centred kind of owner. They do not attend any body corporate meetings and demonstrate little interest, if any. However, they are quick to demand immediate attention if anything is the matter with regard to their personal convenience. It appears as if they consider the levies they pay entitle them to all the 'conveniences of non-free-hold property'; come and go as they please; and no responsibility regarding common property.

My neighbour causes nuisance

Smoke, noise, vibrations, dust, odours, light, blockage, animals, children, noxious fumes ... whatever the nuisance, what may you do; or expect the trustees of a sectional scheme to do regarding unreasonable interference?

The Sectional Titles Act (STA), No 95 of 1986, §44(1)(d+e), as well as the Sectional Titles Schemes Management Act, No 8 of 2011—that would repeal sections 37 to 48 of the STA—§13(1)(d+e) reads "an owner must":

• (d) use and enjoy the common property in such a manner as not to interfere unreasonably with the use and enjoyment thereof by other owners or other persons lawfully on the premises;
• (e) not use his or her section or exclusive use area, or permit it to be used, in a manner or for a purpose which may cause a nuisance to any occupier of a section;

There is both a duty not to cause a nuisance and a right not to be unnecessary disturbed.

But what consitutes unreasonable interferance? There are no definitions, the common law applies, namely material interference an ordinary person would have reason to object about. It does not make provision for unusual aversion or a medical condition of intollerance. Professor Graham Paddock elaborates on this matter as it pertains to smoke nuisance and the Tabacco Product Control Act in a video on smoking in sectional title schemes. Download Paddock_Smoking

The trustees of a sectional title scheme can only be expected to intervene if a rule exists that they are obliged to enforce. If a rule does not apply to a particular situation considered a nuisance, an owner or occupier has to tke the matter up with the source of the perceived nuisance. The complainant may pursue prescribed managment rule 71 if the other party is not willing to accommodate.

However, in high density residential schemes occupants ought to have robustness and be prepared to tolerate. Quite interesting, the word robust originates from the Latin robustus, meaning "strong and hardy," originally "oaken," from robur, robus "hard timber, strength," also "a special kind of oak," named for its reddish heartwood.

Sharing costs through sectional title ownership

A substantial advantage of owning property in a sectional title scheme, in contrast to free-hold property where everything belongs to the owner, is that ownership of everything other than the your personal section is shared ownership. The title deeds usually reads something to the effect of:

A unit consists of: (a) ...; and (b) an undivided share in the common property apportioned to the said section in accordance with the participation quota as endorsed on the said section plan.

This reality is possibly the biggest problem of sectional title ownership, in that owners appear to perceive that some entity other than themselves are responsible. This 'b' part of the title deed encompass membership of the body corporate of the scheme. The Sectional Titles Act (STA), No 95 of 1986, §36(1), as well as the Sectional Titles Schemes Management Act, No 8 of 2011—that would amend section 36 of the STA—§2(1) reads:

With effect from the date on which any person other than the developer becomes an owner of a unit in a scheme, there shall be deemed to be established for that scheme a body corporate of which the developer and such person are members, and any person who thereafter becomes an owner of a unit in that scheme is a member of that body corporate.

This is an important issue that Andrew Buttress fails to address in his message to the Roodepoort Record (Download Is_threre_a_loophole_in_the_law-loss_of_financial_control_Rdp_Record_22July2011). The abovementioned acts outline the responsibilities of the body corporate, which is elaborated upon in the prescribed management rules (PMRs). It is important to note that a body corporate may make use of the services of a managing agent, but is not obliged to, they owners may self administer. PMR 46 outlines what the appointment, powers and duties of a managing agent (MA) should entail. In my opinion MA is a misnomer, it should be administrative agent.

The biggest 'loophole' in sectional title is owner apathy. There are many checks and balances in place to preserve the rights of owners, but few owners show any real interest. What Constantia Sectional Title Management did is criminal, but it does not absolve the trustees and owners of schemes affected from their responsibility.

Who is liable to pay CoJ with CSTM being liquidated?

Do you as owner know for sure that all services rendered are paid up to date or do you pay your levies and don’t bother? Some 22 000 owners of some 450 sectional title schemes, most of which probably within the City of Johannesburg, relied on third and fourth parties with regard to their personal financial obligations.

In sectional title schemes everything that is not part of the individual sections is owned by the collective of owners, known as the body corporate. This collective, as legal persona, has obligations. The liquidation of Constantia Sectional Title Management (CSTM) should serve as a wake-up call for all sectional title owners. Download CSTM - Trustee Letter - Lexstar

• On 24 May 2011 the North Gauteng High Court in Pretoria ordered the liquidation of CSTM
• All trading halted and accounts frozen pending investigation
• It will take quite a while before any funds available will be released
• Owners are not able to sell their properties and buyers may find it hard to obtain loans

This means that 450 schemes were without the funds, held in trust at CSTM, since 24 May 2011 and that 22 000 owners are facing financial liabilities if the body corporate concerned does not have a separate bank account in its own name to keep the reserves for maintenance.

Hard as it may seem, it is none of the concern of the local authority if funds entrusted to a third party disappears. The local authority renders services and has the right to payment. The same apply to all the other service providers of the bodies corporate affected.

Many bodies corporate rely on managing agents to take care of everything. Some bodies corporate even experience difficulty at annual general meetings (AGMs) to get trustees elected. Many owners never attend AGMs and abdicate all responsibility.

The nomination and election of trustees for each financial year is a very important matter. Owners are entrusting the financial well being of the collective property and responsibility to such individuals elected as trustees. The trustees in turn may self manage the affairs of the scheme or employ an agent to handle certain affairs entrusted to such a service provider. However, the trustees remain responsible to manage, maintain and control and in turn are accountable to the collective of owners. Michael Bauer advocates the four eyes principle contained in prescribed management rule 27.

The collective of owners annually approve the budget for the financial year ahead. This budget determines the levies payable by owners of individual sections in accordance to the participation quota (prorate portion in the scheme). The collective of owners makes the rules in according to which the trustees manage the affairs of the collective. The trustees get the annual financial statements produced and audited for tabling at the AGM.

A body corporate is capable of being sued

"Sewage battle to end up in court" reads a caption in a local weekly paper. Download Sewage_battle_to_end_up_in_court_Rdp_Record_29_09_2011

In this regard the Sectional Titles Act (STA), No 95 of 1986, §36(6)(c), as well as the Sectional Titles Schemes Management Act, No 8 of 2011—that would amend and repeal section 36 of the STA—§2(7)(c) reads:

2(7) The body corporate has perpetual succession and is capable of suing and of being sued in its corporate name in respect of—(c) any matter in connection with the land or building for which the body corporate is liable or for which the owners are jointly liable

It would be in the best interest of the owners collectively, or the Body Corporate of Aqua Azure (SS ?? / ????) as legal persona, that the trustees resolve the plumbing and sewage problems.