Demystifying Community Scheme Living: Answers to the most commonly asked queries
Introduction:
Living in a community scheme in South Africa brings numerous advantages, but it can also pose questions for property owners. Here, we explore the most frequent queries regarding community scheme ownership and offer clear, positive solutions to demystify this aspect of property ownership.
Levies and Financial Management:
Question: How are levies calculated, and what do they cover?
Answer:
Sectional Title Developments: In standard Sectional Title developments, levies are calculated based on the participation quota allocated to each unit within the sectional title scheme. This participation quota is determined by the size and value of the unit in relation to the scheme as a whole. Levies typically cover expenses such as maintenance of common areas, insurance premiums, administrative costs, and reserve fund contributions.
Homeowners Associations: Similarly, levies in Homeowners Associations also cover expenses such as maintenance of common areas, insurance premiums, administrative costs, and reserve fund contributions. However, more often than not, these levies are split equally amongst the members. This however is determined by is noted in the Memorandum of Association or Constitution. Maintenance and Repairs:
Question: Who is responsible for maintenance and repairs in a community scheme?
Answer:
Sectional Title Developments: The responsibility for maintenance and repairs within a sectional title scheme is typically divided between the body corporate and individual owners. The body corporate is responsible for maintaining and repairing common property (the exterior of the building), while owners are responsible for maintaining and repairing their own units (The interior). However, the specific division of responsibilities may vary depending on the scheme's rules and regulations.
Homeowners Associations: Individual owners usually take care of their own building and stand in most Homeowners Associations. However, the Homeowners Association pays for the common property roads and amenities. Meetings and Decision-Making:
Question: How are decisions made, and how can owners participate?
Answer:
Sectional Title Developments & Homeowners Associations: Decision-making within a community scheme is typically carried out at the Annual General Meeting, which consists of all the owners in the scheme. Important decisions, such as budget approvals, rule changes, and maintenance projects, are made at these meetings. Owners have the right to attend meetings, raise concerns, and vote on matters affecting the scheme.
If owners want to have more say in the daily running and choices of the scheme, they can also nominate themselves to serve as scheme executives (also called trustees and directors). Insurance and Risk Management:
Question: What insurance coverage is required for community scheme ownership?
Answer:
Sectional Title Developments: Sectional title schemes are required to have insurance coverage for the buildings and common property within the scheme. This insurance typically covers risks such as fire, flood, and structural damage. However, owners are encouraged to obtain additional insurance for their own units and possessions, as the scheme's insurance may not cover everything. It's essential for owners to review the insurance policy carefully and understand what is covered.
Homeowners Associations: Each owner in most Homeowners Associations has to take care of their own insurance. But the Homeowners Associations can choose to insure shared property like the roads, security booth, playground and so on. This insurance usually covers things like fire, flood, and damage to the structure. Property Ownership
Question: What does an owner actually own?
Answer:
Sectional Title developments: A sectional title owns a unit in the sectional title scheme, which consists of a section (i.e., flat or townhouse) and an undivided share (or percentage) of the common property. Some like to simplify this to say, 50% of the wall inwards belongs to the owner and 50% of the wall outwards belongs to the Body Corporate.
Some parts of the common property can also be designated as exclusive use areas (i.e. parking bay or private garden) but this is usually granted as a "use right".
Homeowners Associations: Usually, the owner of a stand and structure in a Homeowners Association, owns them. Voting
Question: How does voting at an owners meeting work?
Answer: In sectional title developments and homeowners’ associations, owner’s meetings have different types of resolution requirements, and this depends on the matter being decided on.
The most usual form of voting is ordinary majority resolution. This means the vote will be approved if more than half of the owners vote in favour of a certain resolution. This is the typical way the community scheme makes decisions on matters, for example, when the body corporate chooses the trustees or passes the yearly budget.
There are times when a Special Resolution (75% of the owner’s present) is required.
Lastly, there are also instances where unanimous resolutions (100% of the owner’s present) are required.
Pets
Question: Do I require authorisation to get a pet?
Answer: Sectional Title Developments & Homeowners Associations: For both situations, you should talk to the Scheme Executives and/or Managing Agents. Most community scheme rules have rules about pets, and you should familiarize yourself with these and apply before getting a pet. Levies & CSOS Levies
Question: Can I refuse to pay my levies?
Answer: Sectional Title Developments and Homeowners Associations: Owners must pay them in full and on time. This is a legal obligation. When one or more owners do not pay, it can cause financial problems for the scheme. It is very important to recover those costs for the scheme's care and maintenance. If one does not pay, one may face interest and late payment charges on one's account (as well as expensive legal fees and damage to one's credit rating).
Question: What is the CSOS levy?
Answer: Community schemes like sectional title developments and homeowners associations: The CSOS levy is a fee that a community scheme charges the owners in the scheme and pays to the CSOS under Section 29(1(b of the Community Schemes Ombud Service Act No. 9 of 2011, which started on 7 October 2016.
Each scheme is obligated to collect the prescribed CSOS levy from every owner in the scheme and to pay such an amount over to the CSOS on a quarterly basis. Rules and Regulations:
Question: What rules and regulations govern community scheme ownership?
Answer:
Sectional Title Developments: Sectional title schemes are governed by the Sectional Titles Act, the regulations, the management rules as well as a set of rules known as the conduct rules, which are registered with the Community Scheme Ombud Service. These rules cover various aspects of communal living, such as pet ownership, noise levels, parking, and architectural guidelines. Owners are required to abide by these rules, which can be amended through a formal process involving the body corporate and owners' approval. Homeowners Associations: Likewise, most Homeowners Associations also follow a set of conduct rules that are registered with the Community Scheme Ombud Service. However, Homeowners Associations setup in terms of Section 21 companies are also subject to the companies act and what is stated in the Memorandum of Association.
Conclusion:
Navigating community scheme ownership in South Africa is an opportunity for collaboration and mutual benefit. By understanding and engaging with common queries surrounding levies, maintenance, rules, meetings, and insurance, owners contribute to a thriving community environment. Embracing the principles of shared responsibility and active participation ensures a rewarding experience and safeguards investments for the future.
For expert advice on sectional title schemes...
Contact Solver Property Services today for advice on any of the points covered in this newsletter. Alternatively, seek the advice of a professional valuer with experience of sectional title schemes.
Disclaimer: Kindly note that the above article is merely for information, and is not intended to be comprehensive, to provide legal advice or to assist Community Schemes with the discharge of their fiduciary duties. It does however cover some important aspects on trustee responsibilities, Body Corporate and Homeowners Associations insurance, and more.
Solver is amongst the larger property managing agent companies in South Africa and have been managing community schemes effectively since 2005. High-rise sectional title buildings, Homeowners Associations, share blocks, apartments, we manage it all. For more information, please contact 010 822 2882. Solver Property Services has a team of experienced Property Managers / Managing Agents that can assist you
