While stand alone properties normally present no shared responsibilities apart from the owner with regards to its affairs, sectional title schemes do come with a division of responsibilities amongst the tenants and/or owners, and the body corporate.
Owning a property in a shared scheme obviously presents itself with obligations amongst the parties to make living together in such scheme without challenge.
Foremost amongst these obligations is with regards to levies/contributions towards the upkeep and maintenance of the whole sectional title scheme.
While the owner of a unit is responsible for the maintenance of their private area, the body corporate retains the obligation to maintain the common areas which form part of the scheme.
It is these contributions from the owners of properties in the scheme which are used to maintain the property’s common areas, and to run the administrative affairs of the scheme.
For purposes of clarity, contributions are due upon adoption of their resolution and any subsequent owner to a sold unit will be responsible as at date of transfer of the unit.
The Sectional Title Schemes Management Act of 2011 (Act) provides for the establishment of an administrative fund by each body corporate.
The administrative fund requirement in section 3(1)(a) and (b) ensures that the body corporate has ready funds for its expenses to cater for the control, maintenance, repair, insurance, utilities as well as any other emanating from the management of the title scheme property as a whole.
The reserve fund on the other hand, which is also provided in the same legislative provision, is aimed at funding the implementation of a 10-year maintenance, repair, and replacement plan which the trustees must develop.
The contributions themselves are raised by way of adopted resolutions of a budget at an annual general meeting called by the Trustees.
The budget is an estimation of expenses for the next financial year, which then is divided into monthly premiums amongst the sectional titles in that scheme using special formulas depending on the size of the private property (participation quotas = PQ). Deviation from the calculation of contributions using such formulas is allowed, by special resolution.
In the event that there are some expenses which are really necessary but were not budgeted for in the adopted budget at the annual general meeting, Trustees are empowered by the provisions of section 3(3) of the Act and PMR 21(3)(a) to raise these as contributions or lump sum payments, by way of special contributions.
However, Trustees may not have authority to call for special contributions to compensate for budget estimates that were exceeded unless armed with a court order.
It happens in some instances too, that the owner of a sectional title believes that the body corporate owes him for expenses that were the responsibility of the body corporate which he had no choice but to pay. In that instance the best path would be to declare a claim and have the matter resolved through an adjudication process to determine to what extent and quantum the claim is justified.
The same goes for instances where owners of a sectional title are of the view that they were levied unlawfully.
The prescribed management rule (PMR) 20 provides that an owner who does not settle their share of contributions may not vote on ordinary resolutions, rendering it ineffective as this does not preclude them from voting on special resolutions or attending AGMs.
The body corporate however may notify the defaulter to settle the bill, failure of which the Ombudsman or legal action may be initiated against the defaulting party. It is therefore advisable that all lawful contributions be settled by sectional title owners so as to avoid the incur of costs and interests.
Kindly contact us for comprehensive assistance with regards to the above as well as property related matters in general. Our property attorneys in Cape Town and Johannesburg offer professional legal assistance with property related matters, including sectional title schemes.
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