The growing popularity of arbitration rather than litigation in sectional title property disputes stems from it being both less expensive and faster.
“In view of the effectiveness of arbitration it is important that all sectional title trustees and owners know how to go about it,” says Bauer.
This is according to Michael Bauer, GM of property management company IHFM, who points out that the Sectional Title Act’s Prescribed Management Rule 71 was recently amended so that now only the Chief Registrar of Deeds can appoint an arbitrator.
Although this can delay the process slightly (previously any registrar could act in this way) arbitration is still preferable to litigation, he says.
The Prescribed Management rule allows for arbitration between an owner (or owners) and the body corporate – or vice versa – and between one or more owners and another owner or owners.
“In view of the effectiveness of arbitration it is important that all sectional title trustees and owners know how to go about it.”
The steps in the process are:
- “Serving”, i.e. delivering a first notice of dispute to the other party. This must state in full the nature of the complaint or dispute.
- Notifying the scheme’s trustees and managing agent of this.
- Waiting 14 days for a response, failing which either of the parties can then demand that arbitration goes ahead.
- Serving a second notice of dispute and proposing two or three suitably qualified and independent persons as arbitrators.
- Allowing three days for a reply, failing which, or in response to which, the complainant can ask the Chief Registrar for an arbitrator to be appointed – who will then guide both parties through the arbitration process.
Bauer says “thankfully” just the threat of arbitration often brings about a settlement because it is now widely known that the loser may end up having to pay not only what is demanded (if cash is involved) but also the legal costs for himself and his opponent.
He adds that Prescribed Management Rule 71 will fall away when the Community Schemes Ombud Services Bill comes into the effect.