select
|

Sectional title: The role of the Body Corporate explained

In the past 10 years, the number of sectional title schemes in SA has risen exponentially, and the latest figures show that there are currently well over 700 000 sectional title homes in the country, estimated to house more than 6-million people.

“What is more,” says Bill Rawson, chairman of the Rawson Property Group, “property data company Lightstone puts the total value of sectional title property at around R665-billion, so it is increasingly important for the owners of sectional title units, and the banks that hold the mortgages on 58% of them, to understand how sectional title schemes are supposed to be set up and run.

“However, there is still widespread misunderstanding of even the basics, starting with the Body Corporate and how it is established, as well as what its functions and powers are. And this often gives rise to many problems and disputes in sectional title schemes which could quite easily have been avoided.

Quite simply, he says, the Body Corporate of each sectional title scheme is made up of all the unit owners in that development, and it is legally responsible for the day-to-day and financial management of the scheme.

“It is established - automatically - when the first unit transfer from the developer of a sectional title scheme to a new owner is registered, and then it steadily gains more members until the last unit is sold and transferred, at which point the developer or development company ceases to be a member.”

The designated tasks of the Body Corporate, Rawson notes, include the following:

- To ensure the payment of any levies and other contributions owed to the scheme and any interest payable on arrears; 
- To set up bank accounts for the scheme and ensure that its finances are properly managed;
- To arrange insurance for the scheme and ensure that the annual or monthly premiums are paid;
- To arrange with the local authority for the bulk supply of services such as electricity, water and rubbish removal and ensure that the accounts for such services are paid;
- To establish and maintain the scheme’s common property, including gardens, passageways, lifts, security equipment and recreational facilities, for the benefit and use of all residents;
- To select, hire, oversee and pay any suppliers, service providers and contractors who may be needed to perform work for the scheme;  
- To appoint agents and employees to assist in the running of the scheme if necessary;
- To borrow money if necessary to improve the scheme or put it on a sound financial footing;
- To do all that is necessary to enforce the rules of the scheme;
- To establish a reserve fund as stipulated by the Sectional Titles Amendment Act and invest any surplus funds on behalf of the scheme; and
- To ensure that the scheme meets its obligations as regards registration and payment of the required fees to the office of the Community Schemes Ombud.

“However, this is by no means an exhaustive list and in bigger sectional title schemes especially, it would be very impractical for every owner to be involved in day-to-day operations and decisions, so the Body Corporate will usually elect a smaller group of owners as Trustees to act on its behalf.

“Sectional title legislation makes provision for this and gives Trustees the power to make certain decisions without always having to revert back to the Body Corporate for a mandate.”

And by and large, he says, Trustees work very hard on behalf of their fellow-owners and try their best to protect and enhance the value of everyone’s investment. “But the fact remains that most are amateurs when it comes to real estate. It is also becoming difficult to comply with all the requirements of the increasingly complex Sectional Title legislation, so most Trustees (and Bodies Corporate) could really do with the help of a professional managing agent.

“Time and again it has been shown that sectional title schemes that employ competent managing agents have fewer problems with levy arrears, for example, and are also cleaner, more secure and better maintained – and this should please even those members of the Body Corporate who are not interested in serving as Trustees themselves.

“However, Trustees do need to check the credentials and references of managing agents very carefully before making any appointment, and must ensure that their agent is a member of the National Association of Managing Agents with a valid and current Fidelity Fund Certificate.”


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 22 Feb 2018
      An excellent credit score is one of the most priceless assets a potential home buyer can have. This tool has the power to secure favorable mortgage and refinancing rate, influencing everything from the size of the loan repayment to the interest rate on the home loan.
    • 22 Feb 2018
      What do you do if you love your home’s location and the area, but the home no longer fits your growing family’s needs? Do you stay and renovate your existing home or find a home that meets your developing criteria?
    • 22 Feb 2018
      While every owner wants to sell their property at the best possible price, overpricing a home can be the kiss of death for a sale.
    • 21 Feb 2018
      Given the hand they were dealt, government has performed a delicate balancing act which it is hoped will serve to reignite confidence in investment in South Africa, regain our global credibility and satisfy the credit ratings agencies, says Dr Andrew Golding, chief executive of the Pam Golding Property group.
    • 21 Feb 2018
      The real estate mantra, ‘location, location, location’ remains a strong market influence regardless of the prevailing economy, with suburbs like Rondebosch enjoying the buffering benefit of being ideally situated.
    • 21 Feb 2018
      These days most buyers are using online property portals like Private Property when house hunting due to the convenience, up to date information and variety on offer. “The property portals have revolutionised the way buyers shop, but they do need to be cautious – viewing photos online is no replacement for viewing the property in person,” says Bruce Swain, CEO of Leapfrog Property Group.
    • 20 Feb 2018
      Owning a home is a milestone that most South Africans aspire to. Becoming a homeowner is a step towards growing personal wealth and owning an asset that appreciates in value over time, provided of course that the correct principles are applied during the buying stage of the process, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 20 Feb 2018
      The suburb of Greenstone in Johannesburg east came to be over the last two decades. “In the beginning, it was literally just a hill with not so much as a shopping centre,” says Michael Levy, Property Consultant at Jawitz Properties Bedfordview. Today it has plenty shopping facilities and is fully built, boasting high-density, upmarket housing and residential estates, though still has a few pockets poised for commercial development.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK