select
|

Sectional property owners 'must take active interest in their schemes'

When owners of sectional title units do not take an interest in the running of their body corporate certain problems can creep in, some as serious as overly large municipal bills, which can actually lead to the insolvency of the sectional title scheme, says Michael Bauer, general manager of the property management company, IHFM.

One particular case he was referring to was a sectional title scheme in Johannesburg where IHFM have been called in to assist with the management and financial salvage, which received a municipal account for electricity in the amount of R3,8 million.

In this particular case, the disconnection notice arrived only a few days before the electricity was cut off, and the building was left without electricity for over ten days.

"How the account was allowed to run up to this amount, no one knows," he said. "In most cases before the amount even gets to hundreds of thousands the municipality would have cut the electricity or water in order to get the overdue amounts paid."

In cases such as these urgent help is needed to manage the crisis and the first step is to raise the money to pay the outstanding account or to arrange a repayment plan with the municipality to settle the amount over a certain period of time, he said.

All the trustees here were also replaced with new trustees who were willing to tackle the problem of the financial mismanagement of the scheme.

Another thing that needs to be done when overly large accounts are presented is to ascertain the actual amount outstanding and check whether the building has been overcharged in any way, said Bauer. In this particular case, there were some inaccurate readings which were then credited.

The next step is to manage the reconnection and raise a special levy or finance to settle the outstanding account. It might be necessary to implement a management system to keep the electricity bills in check.

The trustees need to work on a workable business plan to get the building back on track, where monthly or quarterly reports are generated to check on the finances regularly, he said.

Once the crisis has been averted, he said, the trustees will then need to work out what happened to the scheme's funds and where the levies paid to the body corporate actually went. It might be necessary to commission a forensic audit to work out whether funds were stolen or whether it was purely under-budgeting that left the scheme without enough cash to pay the bills each month.

"This shows just how important it is for owners to get involved and, either become trustees themselves, or to ask questions on the financial management of their scheme," said Bauer.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 23 Jan 2018
      Many people only start thinking about home-ownership when they are ready to “settle down” or start a family, which is why first-time buyers these days are generally in their mid-30s, compared to those in the previous generation who were usually in their mid-20s.
    • 22 Jan 2018
      Moving away from the city to a country or coastal town and a slower-paced life is a frequent new-year resolution for South Africans, but thorough research should be done before you break free from the hustle and bustle, because making the wrong move could turn out to be a very expensive mistake, and even more stressful for you and your family than staying in the “big smoke”.
    • 22 Jan 2018
      Cape Town is home to many breathtaking and historic homes, but House Invermark designed in 1969 by South African architect Gilbert Colyn, with inspiration from two modernist icons: the Glass House by Phillip Johnson and Farnsworth House by Ludwig Mies van der Rohe is in a class of its own.
    • 22 Jan 2018
      2017 was a challenging year for the South African property market in general, despite small pockets of thriving activity in areas like the Western Cape. As we head into 2018, Tony Clarke, Managing Director of the Rawson Property Group, casts his eye forward to property trends and market influences that could make their impact felt in the New Year.
    • 19 Jan 2018
      Extending from Randfontein in the west to Roodepoort in the east and including the towns of Krugersdorp and Magaliesburg, the West Rand has a plethora of property available to residents who choose to make this unique area their home.
    • 19 Jan 2018
      When it comes to financial planning, doing the work to ensure you’re prepared for unexpected emergencies is just as important as ticking off your other goals and New Year’s resolutions. The beginning of the year is also the perfect time to review your various insurance policies.
    • 19 Jan 2018
      No surprises at the first Monetary Policy Committee of 2018, as Reserve Bank Governor, Lesetja Kganyago, announced that the interest rates would stay at their current levels.
    • 18 Jan 2018
      The Southern Suburbs make up some of the most popular residential areas in Cape Town, comprising charming groups of suburbs which lie to the south-east of the slopes of Table Mountain. It is seen as the city's most expensive residential neighbourhoods with a choice of various private schools, upmarket eateries, wine estates, beautiful homes and trendy apartments.
        
    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