Need-to-know for buying ST property – Johan Le Roux

28 Mar 2012

Sectional title property ownership is increasingly popular and today there are over 50 000 schemes, totalling more than 800 000 individual units in South Africa. The concept is tightly regulated under the recently amended Sectional Titles Act – legislation covering every aspect of sectional title ownership – and all owners and tenants must be aware they have very specific obligations and responsibilities that are governed by law. 

 When you buy a unit in a sectional title scheme you will, upon transfer, become the exclusive owner of your section and a joint owner of the common property.

When you buy a unit in a sectional title scheme you will, upon transfer, become the exclusive owner of your section and a joint owner of the common property. Depending on what section you bought, you may also be entitled to the exclusive use of an area such as a parking bay, garden, or yard.

At the same time you will automatically become a member of an association comprising all the owners collectively called the Body Corporate. As a member of the Body Corporate, you have a say in all important decisions surrounding the management of your scheme and the maintenance of the common property. Every year you and the other owners elect trustees who are responsible for the day-to-day affairs of the Body Corporate and generally protect your interests – their duties are clearly described in the Act and rules. 

The trustees, among other duties, have to ensure all owners and occupiers of sections comply with the two sets of rules set out in the Sectional Titles Act. 

  • Management rules these rules deal with matters concerning administration, accounting, and insurance, election of trustees, meetings and the setting and collection of levies. These rules may only be amended by unanimous resolution of owners at a general meeting and are mainly concerned with the efficient operation of the scheme. These are generally fairly standard across schemes.

 

  • Conduct rules these relate to the day-to-day conduct of owners and occupiers, such as the keeping of pets, parking, waste disposal, washing lines, appearance of buildings, etc. These may only be amended by special resolution at a general meeting and will differ from scheme to scheme depending on local circumstances.

 

The most important matter you and other members will have to decide on at the annual general meeting each year is the approval of a budget for your Body Corporate.

The budget will directly affect the monthly levy you – and all the other owners – have to pay to the Body Corporate during the coming year so that the scheme can meet all its financial obligations. 

Without proper budgeting – 

• Your Body Corporate will not be able to meet its financial commitments and this will affect the viability of the entire scheme and will also undermine the market value of your unit. Not being able to pay Body Corporate debts may result in your becoming liable for a further portion of the unpaid body corporate debts. 

• Your Body Corporate will not be able to keep the buildings and facilities in good repair. If this is not done, the value of your property can decline. 

• You and other owners may suddenly find that you are confronted with a very unwelcome, but inevitable, special levy to make up for the budget deficit. 

Once the budget is approved at the AGM, the total expenses for the year are divided among all the owners according to the participation quota. The participation quota is set at inception of the scheme and basically calculates each owner’s stake in the common property. This is purely a mathematical calculation with owners responsible for their share of the total amount.

This is commonly known as the general levy. Once the trustees have established the amount of each unit’s levy they must notify each owner.

If you are fortunate enough to have an exclusive use area, you will have to pay an additional levy for that. These levies are not calculated according to your PQ but according to the actual estimated expenses applicable to your exclusive use area. 

A third, often unpopular, kind of levy is called a special levy. If essential emergency repairs are required within a scheme for which there are no reserve funds, the trustees are able to institute a special levy to raise the money needed. 

This form of levy is often seen negatively by the owners and mainly comes about from a lack of proper financial planning, inadequate budgeting or poor general levy collection. Clearly, this extra lump sum levy places all owners under additional financial pressure and may deter potential buyers from purchasing within the scheme. 

It’s important to remember that trustees are empowered to declare a special levy, without any authorisation by the members as it is their responsibility to maintain the scheme. 

Even if you are unhappy with a certain situation or the conduct of the trustees, you are not entitled to withhold your levy payments for any reason. 

In terms of the Standard Conduct rules, which are applicable in most schemes, the following matters may be strictly regulated: 

Pets 

Do not assume that you are automatically entitled to keep a pet and do not simply accept what may have been said to you by any person who is not a trustee or managing agent of the Body Corporate. To keep a pet you will need the written consent of the trustees and will have to comply with conditions set by them. 

Refuse disposal 

Find out from your trustees what the arrangements are. 

Vehicles and parking 

You cannot simply park wherever you want and must stick to the relevant parking arrangements. 

Alterations to common property 

You have no right to make any alterations to your section which affects the common property, or to alter the common property in any way. Although the conduct rules may make provision for the installation of exterior burglar-proofing, security doors and similar items, you may not proceed without obtaining the trustees’ written consent. 

Signs and notices 

You may not place any sign, notice, billboard or advertisement of any kind on any part of the common property, or even in your unit, if it is visible from outside your section, without the prior written consent of the trustees. This includes a notice board on the common property. 

Laundry 

You may not, without the written consent of the trustees, erect your own washing line or hang any washing, laundry or other items on any part of the building or the common property, so as to be visible from outside the buildings or from any other sections. This includes hanging washing on balconies. 

– Johann le Roux 

About the Author

 Johann le Roux

Johann le Roux is a qualified Chartered Accountant and the business development director at Propell. Propell is a levy finance and collections specialist. The company has been supplying innovative financial solutions to the South African sectional title and Home Owner Association market since 1999 – www.propell.co.za

 
This entry was posted in Latest News. Bookmark the permalink.

Comments are closed.