Sectional Title Living

You are one of 'them'

Your ownership of a unit in a scheme immediately makes you a member of the body corporate. A sectional title scheme is a democracy where no one person or small grouping has the power to take minority decisions. There are a number of mechanisms to protect the rights of individual owners.

One such mechanism is the annual general meeting (AGM) where a number of prescribed things happen. Among others, the audited financial statements are tabled, as well as the budget for the ensuing financial year. The term of office of the existing trustees terminates and new trustees are elected. It just makes good sense to take the time and trouble to attend the AGM and influence the affairs of the scheme, of which your unit forms a part.

The body corporate (consisting of all owners) controls, manages and administers a sectional title scheme. The trustees that are holding office are the managers - subject to the Sectional Title Act, the Rules and any restriction imposed and/or any direction given by the owners. They are, as the Paddocks - Sectional Title Survival Manual puts it, the servants of the body corporate, not its masters.

Refer to part VIII of the Sectional Title Act for more information. [Revised 17 May 2010]

'Poly' property and obligations

‘Poly’ property (from Greek πολυ [poly, meaning many or several] — in this case ownership) or common property.

One of the perceived advantages of sectional title living is that you need not worry about anything other than your section. Wrong!! In addition to your section you also own an undivided share of the common property. Paddocks - Sectional Title Survival Manual describes it succincly "The 'common property' includes all the land and those parts of the building that are not sections, i.e. all parts of the scheme that cannot be exclusively owned by any one person individually".

For example:

• The perimeter wall/fence, maintaining it as a good security barrier, perhaps with electric fence and armed response.
• The gates in good working order, proper and reliable access control, the functioning of a motor to open and close the gate, the remote controls, closing and locking mechanisms.
• The aesthetic appearance of the exterior of the building and the maintenance to preserve the value and avoid damage.
• The functioning of the lift and statutory maintenance compliance.
• Fire extinguishing facilities and routime maintenance.
• Cleaning of the building, rubbish removal and maintaining the gardens.
• The water reticulation and electricity distribution throughout the scheme.
• The range of services with regard to all the aforementioned and other.
• The waterproofing of the roof, regardless if your unit is lower down.

The responsibilities of all the above and several other are shared among the owners collectively, managed by the trustees and financed through payment of levies.

Revised 17 May 2010

'Why must I pay a levy?' or 'why is the levy so high?'

In order to finance all aspects of common property all schemes have levies. Refer to Section 37(1)(a-d) of the Sectional Title Act. The levies payable is derived from the approved budget for the financial year and devided based on the participation quota.

The floor areas of all the sections of a scheme are added together to derive the total floor areas. The participation quota (Section 32 of the STA) of a section is then calculated and expressed as decimal fraction or percentage of the total floor areas. Normally the participation quota of a section determines the share payable by the owner with regard to the common expenses.

One of the prescribed agenda items (Prescribed Management Rule 56[b][ii]) of a scheme's annual general meeting is the budget of the ensuing financial year. Once approved by the owners, the budget then determines the levies payable by owners based on the participation quota of their sections.

Should there be an unforeseen (or unplanned) common expense, then the trustees have the right to implement a special levy payable in order to fund the non-budgeted expense.

Revised 17 May 2010

"You will be assimilated ..." (The Borg)

A scheme is from the establishment of the body corporate managed and controled in terms of the Sectional Title Act and by means of Rules (Section 35 of the Act).

The Rules provide for the control, management, administration, use and enjoyment of the sections and comprise Management and Conduct Rules. When you buy a section in an established scheme you are obliged to abide by the Rules - see post in this regard.

The body corporate has perpetual succession and shall be capable of suing and of being sued in respect of contracts, damages, exercise of any of its powers or the performance or non-performance of any of its duties, etc (Section 36 of the Act).

The powers of the body corporate (Section 37) includes :

• appointment of agents and/or employees as it may deem fit
• purchase, hire or otherwise acquire
• establish and maintain on the common property suitable lawns, gardens and recreation facilities
• borrow and/or invest money
• enter into agreements with local authorities and/or private providers
• do all things reasonably necessary for the enforcement of the rules

Body corporate cash reserves: why, 'cash back' and how much?

A sectional title or home ownership scheme is a going concern. The members of the body corporate change from time to time because people sell or pass away and others buy the units concerned. The common property need to be maintained throughout. In order to do this there should at all times be a conscious plan to ensure sufficient cash reserves.

Annually, when the levies are determined, there should be a reasonable sum set aside towards growing the cash reserve (refer to Section 37[1][a] of the Sectional Title Act). If adequate provision is made, it would not be necessary for the trustees to implement a special levy in order to undertake necessary maintenance/renovations.

There is no such thing as cash back when an owner sells, because of the going concern nature of especially the common property. Repainting of a complex, for example, is done at various intervals. While an owner lived/owned one/more units in a complex the benefits of the upkeep of the common property is enjoyed. In the mean time money is put aside into the reserve in order to afford major maintenance, such as repainting the entire complex.

An owner should rather present her/his/their property for sale as the unit, common property and a healthy financial state of affairs to the potential buyer. A new owner would not want to be taken by surprise a few months after having moved in, with a special levy payment due.

The size of the cash reserve a scheme should maintain depends on the scope of the maintenance needed, the time intervals, the cost estimates to undertake such and the number of units in the scheme. R500 000 divided by 30 units represents a much bigger share of costs compared to R600 000 divided among 60 units. Would be buyers should consider these factors before making an offer to purchase. If not, there might be some nasty surprises in future.

Revised 17 May 2010

Introduction

Many people appear to have the misconception that if they own a sectional title unit they have no obligations with regard to the overall property within which their unit is situated - wrong!

Many investors appear to think that investment in sectional title does not include responsibility with regard to the common property - wrong!

This blog attempts to clarify some of the general misconceptions concerning sectional title ownership, obligations, who is responsible for what and what to do regarding frustrations.

Please note that the latest posts are added at the end.

During the period 13 July 2008 to 13 October 2012, this blog enjoyed 58 653 visits, which translates to 37.74 per day over the 53 months. During the last 30 days the blog registered 1355 visits. These statistis are indicative of the need for information about sectional title living. Please also note other sites references on the right, under Good Sectional Title Information.

Reviewed 13 October 2012

Alegations of unmandated spending vs ignorance?

 

It appears as if the report above published in the Roodepoort Record of 20 March 2009 reflects a fair amount of ignorance. The Sectional Title Act is intended to protect the rights of owners, not tenants. A tenant is a person or group that rents, occupies, inhabits or hold or possession of land, house, flat or office; that belongs to another; for a period of time; usually for rent. All the owners of a sectional title scheme, together forms the body corporate of the scheme. The body corporate elects trustees at the annual general meeting (AGM), which is a statutory prerequisite. At the AGM the owners may, through majority vote, place restrictions on the owners or give directives. The owners effectively transfer their responsibility to manage the collective affairs to the trustees.

Any trustee may at any time call a meeting of the trustees, but must give proper notice. Any owner may attend the meeting of trustees to speak, but may not vote. If 25% of the owners were to request a special general meeting (SGM) of the body corporate the trustees are obliged to arrange such. If the trustees fail the 25% may proceed, but must adhere to prescribed procedure to arrange the meeting.

The building of parking spaces represents an improvement—which is probably a luxury improvement—which requires both a unanimous resolution by the owners and the necessary approval of the authorities.

Owners should familiarise themselves with the relevant parts of the Sectional Title Act, the relevant Regulations, but most importantly the Management & Conduct Rules of scheme(s) within which they own units. Owners should further attend the meeting of their scheme and exercise their voting power. A sectional scheme is governed on democratic principles. Disputes are determined through arbitration, not necessary civil litigation.

 

Revised 17 May 2010

Sectional title owners may have to tide over an owner in debt

It is not uncommon that when people are debt-ridden that they also get into arrears with levies. The amount of levies payable is determined by means of the approved budget for the financial year divided by the participation quota of the sectional title scheme. The levies are used to pay local authority services, cleaning, maintenance, etc. If one or more owners are in arrears, it then impacts on the cash-flow of the scheme. If the scheme does not have cash reserves, water and electricity may be cut off; the lift may be taken out of use (as precaution) if not being serviced; etc. If the owner-in-arrears succeeds in an application for debt review, the remainder of owners may have to tide the scheme’s cash-flow problems over for an extended period. This in turn impacts on the personal cash-flow of other owners and may place the body corporate under severe strain with regard to costly maintenance; not to mention pensioner-owners. How fair is this?

Revised 17 May 2010

Trustees as custodians of common property & affairs

A sectional title scheme constitutes a arbitrary grouping of people that wanted to own or rent a dwelling that happen to share a geographical space and services. Because of the latter, the arbitrary collection must manage this common space and services. The sectional title act presents a practical solution, namely to annually elect trustees and for this elected number to elect a chairperson (leader)."

The trustees fulfil a very important function, namely they serve as the custodians of the common space, services and interests.

Revised 17 May 2010

Elected as a trustee of the Body Corporate—now what?

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.

Is that lady allowed to chase us off the lawn?

Some kids of our scheme approached me to find out if the owner of the unit adjacent to a piece of common property lawn may forbid them to play on this lawn.

I answered with Section 44(1)(d)&(e) of the Sectional Titles Act (Act no 95 of 1986) in mind (emphasis added): An owner shall:

· 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 his 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;

The children are lawfully on the premises, either as children or grand children of owners or tenants and may therefore play on the common property lawn.

Children playing make noise, it is in their nature. Does the owner of the unit have a right to peace and quiet? The key to this issue is the meaning of what unreasonable interference entail. Children have a right to be children and that includes playing. It is my position that the owner may not forbid the children to play in front of her unit on the common property grass, but may negotiate reasonable times with the parents of the children—that is an element of the democracy of sectional title ownership. The parents in turn have the responsibility to honour the agreement and make sure their children adhere to the times.

To add insult to injury, the owner of the unit in question has a little dog that barks when the kids play on the lawn. It is my position that the right to play of the kids should enjoy preference over the doggie. The owner must move the dog to a room where the dog would not have reason to bark at the kids when they play during their agreed time.

The children had been playing on a bigger piece of lawn, which took a bit of a hammering. The trustees wish to restore the lawn and made a request to the kids not to play on it while restoration is in progress. That is why the kids reverted to the lawn in question (smaller).

Balancing the interests and needs of all involved in a sectional scheme is never easy.

 

Revised 17 May 2010

Electricity cut-off, right to prior notice

 
"There is no absolute right of access to electricity, let alone a right to an uninterrupted supply of electricity where the municipal provider is not being paid and where the consumers are not indigent persons," Judge Mahomed Jajbhay of the South Gauteng High Court in Johannesburg said in April 2009, when he dismissed the application of about 30 tenants and their families living in Ennerdale Mansions, central Johannesburg, owned by Mr Thomas Nel.

The residents of Ennerdale Mansions, have been without electricity since July 2008 after the City of Johannesburg (CoJ) – City Power disconnected the electricity supply because the building's owner was R400000 in arrears. However, the residents had been paying their electricity bills to the landlord as part of their rental accounts and everybody had been up to date.

Six of the original applicants then approached the Constitutional Court to overturn the high court judgment. The residents' lawyer, Shaheda Mahomed, said in the founding application that the residents did not contend they had a right to free or unlimited electricity. They also did not contend that City Power was precluded from cutting off electricity in appropriate circumstances and after following a fair procedure. "The crux of the applicants' case", Mohamed argued, is that the cutting off of electricity to Ennerdale Mansions should only have occurred after City Power had followed a fair procedure in relation to them. Mahomed further argued that such a procedure required City Power to alert residents about the likely cut-off, perhaps by means of notices posted in the foyer of the building; allow them time to make representations to City Power; and for consideration of these representations before deciding to cut off the electricity. He added that it is common practice that none of the above occurs. While notice was given to the building owner, Mr Thomas Nel, no prior notice was given to the tenants. They were afforded no opportunity to make any representations to City Power.

The Constitutional Court (Concourt) ruled on 9 October 2009 that Johannesburg City Power's disconnection of electricity in a block of flats, without prior notice, was unlawful and granted the appeal because "procedural fairness" should be taken into account, not only for customers of City Power, but "to any person whose rights would be materially and adversely affected by the termination of electricity supply". According to the judgment, although the CoJ bylaws permit the termination of electricity supply "without notice", it is inconsistent with the Promotion of Administrative Justice Act 3 of 2000 and section 33 of the Constitution of South Africa. Concourt ruled that City Power had an obligation to notify, not only its customers, but also anyone else who would be affected by the disconnection. The tenants should have at least been given 14 days' notice. Concourt also ruled that City Power should pay the tenants' costs of the High Court and the Constitutional Court and that electricity should be reconnected in the building.

Where does this Concourt ruling leave tenants of sectional title units? In my opinion:

• If each unit receives electricity directly from the local authority, the local authority is obliged to give notice to the owner concerned and the tenant.
• If the scheme as a whole receives electricity in bulk and the scheme is in arrears, then the local authority is obliged to give notice to the body corporate and the tenants by, for example, posting a notice at the scheme.
• When a tenant is in arrears, then the owner needs to give the tenant at least two week's notice before cutting off electricity.
• If the trustees of a body corporate in arrears with electricity payments receive notice, the trustees are obliged to advise owners and tenants.

What is the opinion of other about my four conclusions?

New era in Sectional Title in SA

In line with the strategy of the Cabinet (of South African government), all housing-related legislation currently administered by other government departments is being brought under one roof, namely the Department of Human Settlements.

At present the Sectional Titles Act (No 95 of 1986) resorts under the Department of Rural Development and Land Reform, which primarily deals with registration and survey issues. However, the mandate of this department does not include dealing with problems related to scheme governance or with complaints from the public. Towards this end, the Sectional Titles Schemes Management Bill, 2009 has been gazetted in order to move the management provisions from the said act and incorporate such in a new statute under the Department of Human Settlements. The Bill consists of five parts:

1. Bodies corporate — establishment, membership, name, capacities, functions; the functions, powers and fiduciary position of trustees; and proceedings on behalf of.
2. Body corporate rules and participation quotas — rules applicable to body corporate and sectional owners; the effect of quotas and the variation thereof.
3. Dealings with common property and exclusive use rights — various legal transactions regarding common property and units, for example: alienation, letting, expropriation and extension of common property; exercising real right of extension; servitudes in favour of or burdening the land; subdivision and consolidation of units; extension of sections; and delineation and cession of exclusive use rights.
4. Owners, administrators and buildings — duties of owners; insurance; recovery of unsatisfied judgement debts; non-liability for debt of developers; appointment of administrators; damage to, disposal and destruction of buildings; valuation and recovery of rates by local authorities.
5. Miscellaneous — establishment of a Sectional Titles Schemes Management Regulation Board to advise the Minister concerned; making of regulations; transitional provisions.

Those familiar with the content of the existing Sectional Title Act would realise that the Bill does not present much of a deviation, other than moving to a new government department. However, the intention is also in time to simplify and make more understandable the relevant provisions.

The significance of the new era relates to the Community Scheme Ombud Service Bill, 2009. The term ombudsman means representative of the people. The Department of Human Settlements chose the terminology Ombud Service as a more embracing notion with the following underpinnings:

• A simple an inexpensive recourse
• An independent national public entity, fair and impartial
• Uniformity and consistency in handling disputes
• Protection of and remedy for good scheme administration

This Bill also comprises five parts:

1. Establishment; mandate and functions; governing board, executive and staff; and funding.
2. Application procedures and capacity indicators.
3. Investigation of issues and the rights of representation of parties.
4. Order that adjudicators may make in resolving disputes and the right of appeal of parties.
5. Public access to information regarding orders and levies payable by schemes to sustain the Ombud Service — hopefully a small amount payable for the greater good with regard to community living.

The closing date for public comments about the two Bills had been Monday 30 November 2009.

Damage caused by seepage from above

Despite several resources, it often amazes me how little sectional title owners know about their rights and responsibilities.

Allow me to illustrate my statement:

In August 2006 an owner threatened to take the body corporate to court because of inconvenience and damage as result of water seeping through the ceiling of his enclosed balcony when it rains. During the discussion that followed it had been established that the owner has mentioned the problem to former trustees, but never actually followed through with a claim. A claim had then been submitted through the broker. The contractor assigned to investigate and quote reported that the seepage is as result of the deteriorated surface of the open balcony above, causing water to seep through. The insurance company ruled that the surface of the balcony above must first be sealed before any repairs would be approved to the enclosed balcony's ceiling and wall.

The balconies of the scheme concerned are included on the plans of the scheme as part of the square meterage of each unit, and therefore not common property. This further means that the matter does not concern the body corporate, but is an issue between the two owners concerned. The owner of the unit below, that initially threatened litigation, made a half-hearted attempt to get the owner above to oblige to seal the surface of the open balcony. The unit above changed ownership and the owner below just continued to endure the inconvenience and damage—did not even take the matter up with the new owner; try to persuade the new owner or to pursue management rule 71 to resolve the issue by declaring a disputes and entering into arbitration.

Because several open balconies showing signs of seepage, whereas other are enclosed or resurfaced (newly tiled), the body corporate took a decision that the owners of all open balconies that have the original slate (slasto) of 20+ years ago, must at least properly seal their balcony surfaces. Recently (in November 2009) the owner of the unit above obliged and sealed the balcony surface—nearly four and a quarter years later.

The owner of the unit below, however, did not reactivate the original claim to get the insurance company to repair the damage—instead, during the year-end holiday; the owner proceeded to undertake the necessary repairs.

Had the owner of the unit below made a point of knowing and asserting his rights, the following could have been done:

1. Having received the response to his claim in writing, talked to the original owner of the unit above.
2. Followed the discussion up by a letter and in this way started a documentary trail.
3. Declared a dispute and engaged in the process of arbitration.
4. Obtained a ruling, probably in his favour by the arbitrator, as well as the insurance excess payable by the owner above and have this enforced.
5. Got the surface of the open balcony above sealed and the excess paid.
6. Have the damage repaired through the insurance company's contractor.

Cannot afford the levy increase

At a recent Annual General Meeting of a Sectional Title Scheme an owner questioned the reason for maintenance (the same owner wants to be left alone to do as she pleases). This two-fold attitude signifies the ignorance of many owners:

1. Section 36(1) of the Sectional Title Act states in no uncertain terms that every person who becomes an owner of a unit in a sectional scheme shall be a member of that body corporate and section 36(2) that she/he/they shall cease to be a member of that body corporate when ceases to be the owner of a unit in the scheme.
2. Section 37 elaborate the functions of the body corporate, namely:
   1. To establish a fund sufficient for the repair, upkeep, control, management, insurance premiums, payment for services, running expenses and administration of the common property—including reasonable provision for future maintenance and repairs [section 37(1)(a)].
   2. The members (owners of units) shall make sufficient contributions to such a fund [section 37(1)(b-c)].
   3. Among others, to properly maintain common property (including elevators) and to keep common property in a state of good and serviceable repair all plant, machinery, fixtures and fittings; plus to comply with any notice or order by any competent authority requiring any repairs to or work [section 37(1)(j, k & o)].

If an owner is not prepared to accept the responsibility as outlined above, the person or legal entity should not be an owner because it is obligatory. Furthermore, if an owner cannot or can no longer afford the obligatory share of costs (levies payable) the owner should sell because such an owner cannot afford the legal obligations associated with the ownership of the unit/s in the scheme.

Cleaner-gardener wages

Minimun wage increases for domestic workers from 1 December 2012. The South African Department of Labour implemented Determination 7 to protect domestic workers from exploitation. A sectional title scheme usually employs one or more persons (depending on size and scope of common services needed), if it does not make use of contract-services. Such persons are classified as domestic workers and the Determination 7 applies to the relationship between such individual/s and the body corporate, as employer. However, there are contrasting opinions if the sectoral determination 7 applies to the employees of a body corporate - added 27 September 2010.

Minimum wages for domestic workers are set in terms of Determination 7. The minimum wage table is divided in two areas. Area A includes the following South African local governments: Bergrivier Local Municipality, Breederivier Local Municipality, Buffalo City Local Municipality, Cape Agulhas Local Municipality, Cederberg Local Municipality, City of Cape Town, City of Johannesburg Metropolitan Municipality, City of Tshwane Metropolitan Municipality, Drakenstein Local Municipality, Ekurhulen Metropolitan Municipality, Emalahleni Local Municipality, Emfuleni Local Municipality, Ethekwini Metropolitan Unicity, Gamagara Local Municipality, George Local Municipality, Hibiscus Coast Local Municipality, Karoo Hoogland Local Municipality, Kgatelopele Local Municipality, Khara Hais Local Municipality, Knysna Local Municipality, Kungwini Local Municipality, Kouga Local Municipality, Langeberg Local Municipality, Lesedi Local Municipality,  Makana Local Municipality, Mangaung Local Municipality, Matzikama Local Municipality, Metsimaholo Local Municipality, Middelburg Local Municipality, Midvaal Local Municipality, Mngeni Local Municipality, Mogale Local Municipality, Mosselbaai Local Municipality, Msunduzi Local Municipality, Mtubatu Local Municipality, Nama Khoi Local Municipality, Nelson Mandela, Nokeng tsa Taemane Local Municipality, Oudtshoorn Local Municipality, Overstrand Local Municipality, Plettenbergbaai Local Municipality, Potchefstroom Local Municipality, Randfontein Local Municipality, Richtersveld Local Municipality, Saldanha Bay Local Municipality, Sol Plaatjie Local Municipality, Stellenbosch Local Municipality, Swartland Local Municipality, Swellendam Local Municipality, Theewaterskloof Local Municipality, Umdoni Local Municipality, uMhlathuze Local Municipality and Witzenberg Local Municipality. Area B includes the rest of the country not specified in A.

The minimum wage table is divided in two tables. Table 1 determines the minimum wages for domestic workers who work more than 27 ordinary hours per week, whereas Table 2 specify the minimum wages for domestic workers who work 27 ordinary hours or less per week.

Herewith a combination of Tables 1 & 2 for area A only:

Minimum rates for the period 1 December 2012 to 30 November 2013
TABLE 1: 27+ hours		TABLE 2: ≤27 hours
Hourly Rate (R )	8.95	Hourly Rate (R )	10.48
Weekly Rate (R )	402.96	Weekly Rate (R )	285.62
Monthly Rate (R )	1746.00	Monthly Rate (R )	1237.60

Minumum rates for Table 1 (area A) 1 Dec 2012 to 30 Nov 2013 are plus 7.4%

Note that the CPI (excluding owners' equivalent rent) has replaced CPIX according to Gazette No 32397 regulation No. R. 737 dated 17 July 2009 and the August CPI was available 6 weeks prior and thus utilised.

The wages for 1 December 2012 to 30 November 2013 was calculated as follows: CPI (excluding owners' equivalent rent) plus 1% for Area A = 6.4% + 1% = 7.4%.

Each unit owner pays her/his/their share of the wage/s, included in the levy, based on the participation quota relevant to the unit.

Updated 8 December 2012

Why do I have to pay the cost of replacing a circuit breaker?

The cost of replacement or repairs rests with the owner:

• The electricity supplier, e.g. the local authority is responsible for maintaining the infrastructure of supply up to the delivery point to the scheme
• The owners are collectively responsible to maintain the infrastructure of electricity reticulation up to the various sections of the scheme
• The individual owners are responsible for all own electrical wiring, circuit breakers, switches, etc.

Some managing agents have agreements with maintenance and repairs contractors. The various schemes the managing agents serve are provided with a list of approved contractors. When services are required, the trustees come to an agreement and contact the contractor concerned and make arrangements to first get a quote/s or to have the repairs made. The contractor does the repairs if so instructed and the trustee concerned signs the invoice, which the contractor hands in at the managing agent. The managing agent pays the various contractors at agreed intervals and debits the scheme's account. Generally such an arrangement works well.

Ignorance and/or non-adherence to procedure may, however, cause problems, for example:

• If a trustee does not consult other trustees and obtain majority or consensus agreement prior to calling a contractor
• If an owner does not know/understand what the responsibilities of ownership entail and assumes/expects the body corporate (or even the managing agent) to repair/maintain—some owners of sectional title sections just do not comprehend the notion of common (collective) property, in addition to own section and some even are under the impression that the managing agent somehow own the common (collective) property. If such an owner tell a trustee to get a circuit breaker repaired; if the trustee call a listed contractor who does the work; then the managing agent would pay the contractor and debit the owner's next statement. The owner concerned has no option but to pay the amount due. However, had the owner concerned realised that it would be an owner's expense; then the owner may have been able to consider options that might have been cheaper.

If sections are adjacent to one another the median-lines between sections represents the boundaries. In the situation of sides that do not have an adjacent section, the median-lines form the boundary between the section and the common/collective property—the same applies to free-standing sections, the median-lines form the boundary between the section and the common/collective property. Everything on the inside of the median-line is the individual owner's property and responsibility to maintain.

The inner part of window panes and doors is the responsibility of the owners of individual sections, whereas the outer part is the responsibility of the owners collectively (the body corporate). The cost of replacement of a window, if cracked by for example hail damage, is therefore divided 50:50.

Ownership apathy—a sectional title mental disorder

Or is sectional title ownership fraud by the bystander syndrome? The purpose of this post is to indicate that there is really no grounds for apathy of sectional title owners, but rather a demonstration of real interest is most needed.

"Apathy is a mental state in which the sufferer lacks the desire, will or energy to engage in any activity, whether intellectual or physical. It is variously called indifference, boredom, lassitude, languor, listlessness, laziness, lethargy or inertia. It may be a symptom of mental disorder. It is first alienation of the self from the world and then self-alienation. Finally it is withdrawal from all participation in the care of others and care of oneself. Collectively, apathy may be expressed in social, economic, political or ideological paralysis, with all the available energy for change locked up in the institutions, systems and structures of society."

What is it about sectional title ownership that owners are often characterised by apathy? Could it be that people attracted to sectional title ownership have a pre-disposition towards alienation mental disorder?—I am not serious. However, Political Apathy Disorder (PAD) is proposed as a new DSM diagnostic category for the failure to develop a social conscience.

Apathy is a common reaction to stress where it manifests as "learned helplessness"; it really is a veiled form of anger. Apathy is often the end-result of prolonged deprivation—if earlier reaction of rebellion led to defeat and humiliation, until finally all response seemed to disappear—there is loss of hope with an impoverishment of thinking processes. In contrast, sectional title ownership offers the opposite to helplessness, defeat and loss of hope:

• Before buying into sectional title ownership you have the right to inspect the scheme's finances, management and conduct rules, etc.—This is important because you need to make sure if the environment agrees with you and if there are no financial surprises looming.
• As an owner you are a member of the collective ownership, the body corporate—your voting power directly related to your percentage of ownership.
• You have the right (rather obligation) to attend, speak, make proposals and vote at the general meetings of owners.
• You have the right to nominate persons (not necessary only owners—but the majority must be) to look after your interests by serving as trustees. You have the right to elect from those persons nominated who you believe would best serving your interests.
• You have the right to question trustees; to engage with trustees at their meetings and state your views.
• You have the right to lobby support and if 25% ownership (in value) request a general meeting the trustees are obliged to arrange one. Should they fail, the 25% may proceed to call the meeting.
• Meetings are subject to quorums, meaning that al small group may not just do as they please.
• The trustees need to decide on matters collectively and majority vote or through circulation—no one trustee may decide on her/his own.
• Certain aspects are subjected to special or unanimous resolution, to which stringent criteria of notice and percentage voting apply.
• Should you not be in the position to attend a general meeting, then you have the right to send a proxy instead.

Deprivation, helpless, defeat, reason for loss of hope—I think not. Ignorance, yes most probably.

The bystander syndrome: Kitty Genovese, an American woman who became famous for her murder, was stabbed to death in New York on 13 March 1964. Kitty was driving home around 3.15am. She parked about 30 metres from her front door. As she walked to her door, she was approached by Winston Moseley. Moseley overtook her and stabbed her twice in the back. Kitty screamed. Her screams were heard by several neighbours. But it was a cold night, many had their windows shut and few recognized it as a cry for help. One of the neighbours did shout at Moseley, "Let that girl alone". Moseley ran away and Kitty made her way to her apartment. Kitty was seriously injured, in full sight of her neighbours, but no one helped her.

Some called to the police, but it was not given a high priority, as it was thought she was "only" beaten up. Witnesses observed Moseley get into his car and drive away. He then returned ten minutes later and found Kitty barely conscious at the back of the building. Out of sight, he attached her again, stabbing her several more times. She tried to defend herself, as was shown by knife wounds on her hands. He sexually assaulted her as she lay dying. He also stole money from her and left her to die. The attacks spanned over half an hour. Eventually, a witness did call the police. The police and ambulance arrived, but she died on the way to the hospital.

The media then reported that 38 people had witnessed or heard her attack. The New York Times printed an article - "Thirty Eight who Saw Murder Didn't Call the Police." This led to a media frenzy and much psychological research. What had possessed these witnesses to do NOTHING whilst Kitty was being stabbed and murdered? This psychological phenomenon became known as bystander apathy, the bystander effect or 'Genovese syndrome'. It is basically a phenomenon where someone is less likely to intervene in an emergency situation when other people are present and able to help, than they would if they were alone.

Revised 15 June 2010 with regard to 25% ownership in value: based on the participation quotas.

Why should I pay a special levy while others are in arrears?

Good question, deserving some explanation and unpacking.

• Owners of units in a sectional title scheme own collectively the common property
• All the owners together form the body corporate
• The functions of bodies corporate [section 37, Part VIII, of the Sectional Titles Act, 1986 (Act No. 95 of 1986)] include among others:
  • [1(j)] to properly to maintain the common property (including elevators) and to keep it in a state of good and serviceable repair;
  • [1(k)] to comply with any notice or order by any competent authority requiring any repairs to or work in respect of the relevant land or building or buildings;
  • [1(o)] to keep in a state of good and serviceable repair and properly maintain the plant, machinery, fixtures and fittings used in connection with the common property and sections;
  • [1(p)] … to maintain and repair (including renewal where reasonably necessary) pipes, wires, cables and ducts existing on the land …
  • [1(f)] to insure the building or buildings and keep it or them insured to the replacement value thereof against fire and such other risks as may be prescribed;
  • 1(i)] to pay the premiums on any policy of insurance effected by it;
  • [1(a)] to establish for administrative expenses a fund sufficient in the opinion of the body corporate for the repair, upkeep, control, management and administration of the common property (including reasonable provision for future maintenance and repairs), for the payment of rates and taxes and other local authority charges for the supply of electric current, gas, water, fuel and sanitary and other services to the building or buildings and land, and any premiums of insurance, and for the discharge of any duty or fulfilment of any other obligation of the body corporate;
  • [1(b)] to require the owners, whenever necessary, to make contributions to such fund for the purposes of satisfying any claims against the body corporate …
  • [1(c)] to determine from time to time the amounts to be raised for the purposes aforesaid;
  • [1(d)] to raise the amounts so determined by levying contributions on the owners in proportion to the quotas of their respective sections;

The extracts from section 37 of the STA indicate the responsibility of the owners collectively (i.e. the body corporate) regarding maintenance, repairs, compliance with legal imperatives, insurance, payment for services, levies in accordance with all these expenses and raising the levies payable.

The above is all good and well, if the members—the owners of units—each fulfil their obligations. However, things do happen—people experience financial uphill and some people unfortunately just do not care about obligations—arrears occur.

• In terms of Prescribed Management Rule 31(5) "An owner shall be liable for and pay all legal costs, including costs as between attorney and client, collection commission, expenses and charges incurred by the body corporate in obtaining the recovery of arrear levies, or any other arrear amounts due and owing by such owner to the body corporate, or in enforcing compliance with these rules, the conduct rules or the Act."

The remaining owners need to keep the 'boat afloat', while the legal process of collecting arrears takes it course.

It is advisable that a body corporate keeps a reserve of money and institute a planned maintenance programme to spread the costs.

The serving trustees prepare a budget for the forthcoming financial year, which the AGM approves and which essentially determines the levies payable.

When unforeseen things however happen, the serving trustees do have the right and the authority in terms of Prescribed Management Rule 31(4) to raise a special levy. The accumulation of arrears could, for example, cause a cash flow constraint, necessitating a special levy.

 

An owner protested: 'I am not happy about the possibility to pay extra money because somebody did not pay their levies, my record of payment will attest that I also had difficulties in payments and I have just been back on my feet, therefore if I were to pay extra money will take me back to square one and I do not want to be in arrears anymore.'

Agreed; it is not fair—not conforming to approved standards, as of justice, honesty, or ethics. However, while the legal collection process (Download Legal Process Flow Chart - if the document does not open, save it to your PC's hard drive and open it from there) deals with the owner/s in arrears, the remaining owners do not have much of a choice.

Revisited 28 February 2011

Insufficient funds for leaking roof—rights and realities

The facts or circumstances may differ, but many sectional title schemes are faced with realities such as:

• Owners voted for minimum levy increases for several years
• Cash reserves dwindled as result of usage
• Maintenance had been kept to essentials
• At least 10% of owners are in arrears with levy payments; and the arrears and legal fees to collect such have accumulated to a substantial amount
• The lift equipment is 30 years old, maintained in accordance with the law, but wear-and-tear nevertheless—the lift get stuck from time-to-time; is often out of level; and looks aesthetically neglected
• The company that waterproofed the roof for the past twenty years had been liquidated—the warrantee is therefore of no value
• When the previous trustees increased the levies by 10% in accordance to the new Management Rule 31(4A), gazetted 28 November 2008—Department of Land Affairs, No. R. 1264; Government Gazetted, No. 31626—the owners petitioned against the increase
• During the rainy season the roof started leaking at a few places

Options to consider:

1. The owner/s affected by the roof-leakage/s may submit a claim to insurance, but need to pay the excess—new Management Rule 29(4) applies—unless the owners collectively (the body corporate) by means of a special resolution decide that the body corporate will pay the excess (however, 75% of members are perhaps unlikely to assume proportional responsibility for payment of an excess relating to a single section).
2. The owner/s affected by the roof-leakage/s may enter into a dispute with fellow owners (the body corporate) about the excess payable, in which case the arbitration route might be followed (Management Rule 71).
3. The trustees have the right to raise a special levy to have the roof re-waterproofed and guaranteed, but effectively need to raise 110% of the amount required, because the 10% owners in arrears are unlikely to make the special levy payment—the full amount required therefore need to be contributed by 90% owners and the arrears of the 10% escalated.
4. It could be argued that the modernisation of the lift is a non-luxurious improvement; or that the refurbishment is necessary maintenance—if deemed a non-luxurious improvement the trustees need to give notice to the owners and convene a special general meeting where a special resolution need to be passed.

It is important to look into a scheme's situation before buying, because of common property responsibilities. It is further essential to get to know your rights (and obligations as member of the body corporate) as owner within a scheme. Attendance of annual and special general meetings of the scheme (body corporate) is important, because decisions may impact on you materially—a medium term look at maintenance and cash flow (finances) is crucial.