Some interesting FAQ's discussed at Bellbuoy's seminar held in conjunction with TRACS on 26 August 2023.

The questions are grouped into subjects, and reflect commonly asked queries during the course of managing Sectional Title schemes. 

TRUSTEES
1.     May I nominate myself to be elected as a trustee?
 
An owner may nominate any person, including themselves, if they are eligible for nomination in terms of the requirements defined in prescribed management rule 6 (2 or 4).
 
2.     Our chairperson does not live at the scheme – is there a rule that the trustees must live at the scheme or be permanent residents?
 
There is no rule limiting trustees to be resident; anyone may be elected if they comply with the requirements of prescribed management rule 6.
 
3.     Is the rule that the majority of members must be owners or spouses of owners still valid?
 
No, this was the rule before the legislative change in October 2016. Now anyone may be nominated if they comply with prescribed management rule 6.
 
4.     If a person is in arrears, are they disqualified from becoming a trustee or if a trustee falls into arrears, are they disqualified?
 
If the Community Scheme Ombud Service (CSOS) or an adjudicator has made an order, and the person still does not pay then they no longer qualify to be a trustee. Only being in arrears does not disqualify you, but if there is an order and you still refuse that is when you no longer are eligible.
 
5.     Do trustee nominations received before the AGM take precedence over nominations received at the meeting itself?
 
The procedure should be that members will receive notice packs which include a nomination form that they should complete, and include the consent of the nominee, and they will send the information off at least 48 hours before the AGM. At the AGM members need to decide how many trustees they want for the year. For example, if the members decide on 5 trustees and 5 valid nominations were received in advance, then those nominations fill the positions and no nominations are necessary to be tabled from the floor.
     But if insufficient nominations are received, then the meeting will need to accept nominations from the floor. For example, they decide on 7 trustees but only 5 valid nominations then they will need to call for nominations from the floor. The question is do the nominations received prior to the meeting take precedence over nominations taken from the floor. The answer is no; all nominations are then voted on and the nominations that receive the most votes are trustees.
 
6.     I am one of five trustees and three of us want to remove the chairperson how do we do this legally?
 
Prescribed management rule 12(5) states that the trustees at a trustees’ meeting or the members at a general meeting may remove the chairperson from office if notice of the meeting contains a clear statement of the proposed removal, provided that such removal does not remove the chairperson from the office of trustee. The remaining trustees, which includes the chairperson, then need to vote on a replacement chairperson. Queries are often raised by members who would like to process a vote of no confidence in a trustee, but sectional title legislation does not contain reference to a vote of no confidence and the process detailed for the removal of office as chairperson or trustee must be followed.
 
7.     How do you remove a person from the office of trustee?
 
To remove a person from the office of trustee you would need to pass an ordinary resolution in general meeting (51% must agree to the removal). Prescribed management rule 6(4)(g) also requires that the intention to vote on the removal must be specified in the notice. Where the intention to vote on the proposed removal is specified this would be sufficient to meet the legislative requirements, which imply the matter will be debated and then voted on in general meeting. Motivations therefore do not have to be included in the notice of the general meeting. The removal of a trustee cannot happen by round robin resolution. If the trustees do not agree to call a general meeting, then in terms of prescribed management rule 17(4&5), 25% of members or the holder of mortgage bonds over not less than 25% may demand a meeting be called within 14 days. Should the trustees not call the meeting the members may proceed to call the meeting.
 
8.     How do we replace a trustee who is removed or has resigned?
 
If trustees appoint a replacement trustee, the majority vote of trustees is required and if owners are voting there must be majority vote of members.
 
SCHEME RULES
9.     Is it legal to impose fines on transgressor members?
 
Fines may be imposed if there is an enforceable rule in place, approved by CSOS. Refer CSOS circular on amendment of rules in terms of Sectional Titles Scheme Management Act circulated December 2020 (pg 11). CSOS will not allow a penalty of equal or more than the applicable monthly levy of the owner concerned and the rule must detail a fair and equitable procedure for all parties who must have the opportunity to be heard, as required by natural justice.
 
10. Tenants smoke cannibis next door and the smell permeates into my section – can the body corporate become involved or what must I do?
 
Cannibis is not illegal. The body corporate will not typically become involved when it is an issue between two members. The person suffering has a couple of options. The complaint form in annexure 3 to Sectional Titles Schemes Management Act may be completed to notify the body corporate and neighbour. The body corporate may hold an internal dispute meeting or may decide not to assist as it is an issue between the two neighbours. A record of behavioural concerns should be kept. The smell must be proven to be so continuous and horrible that it materially affects the usage of the property. The complainant must also not be especially sensitive to the smell. The parties may declare a dispute in terms of section 39 of the Community Scheme Ombud Services Act and this example can be extended to any offensive smell that permeates through the building.
 
11. My scheme has a no pet rule, which is unfair. Can a scheme enforce a no pet rule?

If the no pet rule was created before the legislative change in October 2016, then the no pet rule would have been replaced by prescribed conduct rule 1 which allows the keeping of animals with written consent. Where the no pet rule was made after October 2016 CSOS does currently allow and enforce no pet rules where they have been certified, but the rule must allow exemptions for members who currently owned pets when the rule changed.
     Professor Cornie van der Merwe has argued that a blanket no pet rule is invalid as it does not allow for individual member or animal circumstances to be considered. This rule therefore precludes ownership rights of usage and enjoyment according to contemporary standards, which includes pet ownership. Further, the no pet rule does not permit balanced consideration of multiple sides of the issue but operates only on behalf of sectional title owners who opposed pet ownership.
 
FINANCIAL & MAINTENANCE
12. I recently bought a unit in a ST scheme and a special levy has been raised for R600,000 in overdue electricity usage incurred before I purchased. I am refusing to pay as I cannot be liable for electricity before my time?
 
The owner at the time the special levy is raised is liable to pay for the levy. Where the special levy is raised in instalments, the pro-rata contributions will be calculated from seller and purchaser. Therefore, an owner can be liable for a debt before they became an owner. Not to pay monies legally owed could result in further penalties and fees.
  

13. Can we stop the trustees from raising a special levy?
 
The best way to avoid special levies is to ensure the budget covers all expected expenses for the following year. Be proactive and attend general meetings to participate in the important decisions. Members can direct trustees to call a special general meeting before raising a special levy. Trustees will still be the party to decide whether to raise a special levy, but it would give members an opportunity to have their say and for the trustees to consider the members’ opinions before making the decision.
 
14. I want to undertake internal renovations. Besides getting building plans approved by council, which I don’t think I need to do, do I still need body corporate approval?
 
A member cannot do anything that impairs the stability of the building or negatively affects the external appearance, value or utility of a section or exclusive use area. If you do not require building plans or the alteration does not affect the external appearance, value or utility of the area then you generally do not need body corporate approval.
 
15. There are cracks in the internal walls of my sections and the cracks are determined as being a result of subsidence from common property foundations. Do I have a claim against the body corporate for the internal damages?
 
If cracks are inside your section then you are responsible for the repairs, but you may have a claim for reasonable costs to repair those cracks owing to the problem originating from common property. Usually repairs within sections are owner responsibility and common property is body corporate. Where it is regulated common property, being exclusive use areas, contributions may be raised, or the member be made directly responsible for costs through the rules.
 
 
Maintenance, repair and replacement plan and administrative (day to day operating costs of the scheme) and reserve fund (future common property maintenance and repair costs over next 10 years) questions. The administrative fund budget includes repairs and maintenance but day to day as opposed to reserve funds which must be based on the maintenance, repair and replacement plan.
 
16. Who should prepare the maintenance repair and replacement plan?
 
The trustees can prepare this plan by inspecting the common property and obtaining quotations, but if they do this themselves, they should have the necessary expertise as otherwise they should outsource this. The danger is that when preparing the plan themselves the trustees sometimes try and keep costs as low as possible, which is not always best for the scheme if it leads to deterioration. Even if this is outsourced the trustees take responsibility for what is tabled to members at the AGM.
 
17. When can money be paid out of the reserve fund? If there is no money in the administration fund to pay for an urgent expense but there is money in the reserve fund can we use this money even if the matter is not noted on the maintenance, repair and replacement plan?
 
Money may be paid out of the reserve fund for any of the reasons detailed in prescribed management rule 24(5) as copied below.
PMR 24 (5) Money may be paid out of the reserve fund-
(a) at any time in accordance with trustee resolutions and the approved maintenance, repair and replacement plan; or
(b) if the trustees resolve that such a payment is necessary for the purpose of an urgent maintenance, repair or replacement expense, which purpose includes, without limitation-
(i) to comply with an order of a court or an adjudicator;
(ii) to repair, maintain or replace any property for which the body corporate is responsible where there are reasonable grounds to believe that an immediate expenditure is necessary to ensure safety or prevent significant loss or damage to persons or property;
(iii) to repair any property for which the body corporate is responsible where the need for the repairs could not have been reasonably foreseen in preparing the maintenance, repair and replacement plan; or
(iv) to enable the body corporate to obtain adequate insurance for property that the body corporate is required to insure;
provided that the trustees must report to the members on any such expenditure as soon as possible after it is made.

18. Is the reserve fund contributions split by participation quota (PQ) or equally between members?
 
As with all levies it is split by PQ, unless a section 11(2) resolution has been passed.
  
19. What is the minimum amount required for the reserve fund?
 
At the first inaugural meeting no reserve fund is legislatively required, but provision is still recommended. However, after that regulation 2 under Sectional Titles Scheme Management Act is relevant:
 
Simply put: If the reserves at the end of the previous financial year -  are less than 25% of the administrative fund - then the reserve amount budgeted for must be equal to 15% of administrative fund.
 
For example: if your administrative budget is R110,000 then the provision for the reserve fund must be R16,500 – the R16,500 is calculated on 15% of the admin budget of R110,000.00.
 
If the reserves at the end of the previous financial year are more than 25% but less than 100% of the administrative fund - then the reserve fund budgeted for must be equal to the repairs and maintenance budget in the administrative fund.
 
For example if your repairs and maintenance is R15,000 then the reserve fund provision must be equal to that.
 
If the reserves are greater than 100% of the administrative fund then no minimum is required.
 
There is no legislative requirement for a minimum amount of funds to be held in the scheme’s bank account. The minimum reserve fund required is calculated on an annual basis and is based on the reserve funds at the end of the scheme financial year.
 
20. What happens if there are insufficient reserves?
 
The Sectional Titles Management Act does not specify any penalty for having insufficient reserves, but any member may approach CSOS to obtain an order if they feel they are prejudiced. If an order is granted the body corporate will have to raise the reserve funds through raising additional funds.
 
21. What is the difference between common law and NPC?

If the home owners association is established as a common law association, its constitution and rules (if any), form its governance documentation, applicable to each member of the association. Should the HOA be registered as a non-profit company (“NPC”), its memorandum of incorporation and rules (if any), and the Companies Act, are applicable. Whichever corporate form is used the governance documents bind members and executives. In addition, the CSOS Act, its Regulations, and the Schedule to the Regulations: Levies and Fees, are applicable.
 
22. If the HOA common law constitution is silent on amendments, what is required?2
 
Every member will have to consent to amend the constitution as this would be based on the contractual legal requirements implied. Usually membership will require a higher level of consent for amendments to the constitution.
 
 
Bellbuoy Directors – TRACS event 26 August 2023