Next year, South Africa will again hold national elections. This has always been a major event since the start of democracy.
Ah yes, democracy – the system through which all people are equal. Each citizen of our great nation will get one vote, irrespective of how much they contribute to the fiscus through their taxes. Sectional title developments are also (supposed to be) based on the principles of democracy. But are they really?
Under the 1986 Sectional Titles Act, the participation quota (PQ) was only used to calculate levies, while each unit had one vote in all body corporate matters. This made sense at the time. Before the implementation of the compulsory reserve fund contributions, all maintenance to be undertaken within a scheme was paid from the contributions paid into the one fund of the body corporate. The budget would normally have included all maintenance projects as one of the major expenses.
The implementation of the Sectional Titles Schemes Management Act 8 of 2011 changed everything. Suddenly your attendance at a meeting depends on how much you contribute to the kitty. So does the value of your vote. How is this democratic?
Part of your unit includes an undivided share of common property, and the more you pay the bigger your undivided share is. This has never made any sense to me.
Then, there are the shared costs. Just because you have a bigger unit doesn’t mean that you use more water, make more use of the security services, or even benefit more from the minor day-to-day repairs.
The new dispensation caused further confusing scenarios in mixed-use developments, where the owner of a shopping centre, with one unit, often has a bigger vote than all the residential units combined. There is almost no need for residential owners to attend meetings since they have very little to no voting rights.
When one looks at the true nature of shared costs, there are only two items that should be influenced by the size of your unit:
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the contribution towards the insurance premium, and
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major projects, such as painting and waterproofing.
Although it is pie in the sky, I would like to see a fairer way of implementing the basic principles of a democracy in sectional title schemes. After much thought, I think that the PQ should be implemented as follows:
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There should be one vote per unit (not member).
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The same should apply for attendance at meetings.
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Admin fund contributions should be the same for all units, irrespective of the size of their PQ.
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Units should pay the insurance premium as a separate line item, which is based on the size of their unit.
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The reserve fund levy should be the only contribution based on PQ.
Not only would this be more just and equitable; it would result in much less admin at meetings in terms of calculating quorums and voting – something that would save time, costs and efforts for all bodies corporate.
Unfortunately, we live in an age of overregulation and the dream to simplify procedures may remain just a dream. However, to quote Capitec Bank: “Simplicity is the ultimate sophistication.”
Please contact us at info@tvdmconsultants.com or 061 536 3138 if you have any questions about this article.
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