Trustees and Executive committee members of Housing Development Schemes (Community Schemes) should take notice of two new acts and regulations that came into operation on 7 October 2016 and that bring important changes to community scheme management.

These Acts are:

Sectional Titles Schemes Management Act 8 of 2011 (STSMA); and
Community Schemes Ombud Service Act 9 of 2011 (CSOSA).

A community scheme means any scheme or arrangement in terms of which there is shared use of and responsibility for parts of land and buildings, including but not limited to sectional titles development schemes, share block company, a home or property owner's association, however constituted, established to administer a property owner's association, a housing scheme for retired persons and a housing co-operative as contemplated in the South African Co-operatives Act, 2005.

All community schemes must register with the Community Schemes Ombud Service (CSOS) 30 days from date of publication of the Regulations and needs to pay a monthly levy of 2% of the monthly levy charged by the community scheme to the CSOS, to a maximum of R40 per unit per month. Failure to comply is an offence and can lead to criminal charges against the governing bodies of such schemes.

With the new legislation all management provisions relating to sectional title schemes are removed from the Sectional Titles Act (STA), which now exclusively deals with land title and conveyancing aspects of the registration of sectional title schemes.

The purpose of the CSOS is to provide a legal structure to monitor and control the administration of private and common areas in all community schemes and to deal with disputes that arise in such schemes between owners/occupiers/interested parties and the management body of the schemes. We trust that the CSOS and the new procedures will lead to faster and cheaper dispute resolution. 

Many Homeowners association constitutions contain clauses relating to dispute resolutions and it is necessary to bring such constitutions in line with the new dispute procedures in terms the CSOSA.

The STSMA deals with the establishment and function of bodies corporate, powers of bodies corporate, insurance, rules and the like in sectional title schemes. It is important to compare a schemes existing rules and the new rules as the existing rules may not be in contradiction with the new rules.

Some of the important changes in terms of STSMA are:

1. Registration with the Chief Ombud at CSOS;
2. Collection of levies by CSOS;
3. Any substitution, addition, amendment or repeal of the prescribed rules must be approved by the Chief Ombud at CSOS, who must decide if a rule is just and equitable on all owners;
4. CSOS handles disputes between body corporates and owners;
5. Deadlocks with Special and Unanimous decisions can be referred to CSOS;
6. The establishment of an Administrative Fund for the administrative duties of inter alia management, administration, repair and maintenance; payment of rates and taxes, insurance premiums and like expenses;
7. The establishment of a reserve fund so as to be able to reasonably cover the cost of future maintenance and repair of common property. Minimum amounts are prescribed by regulation.
8. The preparation of a written maintenance plan.

This article do not allow us to address each and every change to current practice. If you require any assistance or advice on changes to your rules or constitution you can contact Fanie Botes or Salomé van Wyk at Millers Attorneys, telephone number 044-874 1140.