Lets Talk Sectional Title: New Regulations in Force

Although the two new Acts applying to sectional title (ST) schemes have not yet come into operation, some amendments to the old ST regulations have been published in the Government Gazette and have been in force since mid-April.

These amendments are largely technical, in that they deal with the application procedures for the amendments of ST deeds, the professional status of people preparing documents for submission to the Deeds Office and the exact requirements for signing, certifying, countersigning and formatting the appropriate documents.

However, as ST expert Mike Spencer (mikehome@telkomsa.net) points out, changes have also been made with regard to the election of trustees and the calculation of levies between the end of a financial year and the next AGM – and both of these are likely to be of practical use to many owners and trustees of ST units.

To start with, he notes, trustees that are more than 60 days in arrears with their own levies, or are in persistent breach of the rules, are automatically excluded from continuing as trustees and are simply not allowed to be nominated for re-election.

‘This is very important as up until now, trustees who were actually causing problems in a scheme by breaking the rules could still be trustees and thus made it very difficult to discipline them. This change will also make life easier much for normal members of the body corporate who have found it difficult to stop the election of trustees that are not up to date with their levies,’ he says.

The second important change enables trustees to raise a special levy to cover the increased running costs of an ST scheme in the period between the end of one financial year and the AGM of the body corporate in the next financial year – a period which is supposed to be no longer than four months but is often actually longer.

Previously, Spencer explains, the trustees were only allowed to increase the existing levies by a maximum of 10% during this period. ‘Now they can raise a special or additional levy to cover the actual or estimated higher running costs until the AGM. The new levy budget must then be confirmed at the AGM and must run retrospectively from the beginning of the financial year.

He says it is good that the 10% limit has been done away with as it is sometimes necessary to increase the levy by more than this, especially in the case of ST schemes in financial trouble that have been taken over by a new and competent managing agent.

‘But in our experience what works best in practice is to hold a trustees’ budget meeting in the month before the financial year-end and to invite all the owners. This meeting can then approve by consensus the proposed new levy from the beginning of the new financial year, and the budget can be reconfirmed and formally approved at the AGM.’

05 Aug 2015
Author Source www.propertyjunction.co.za/news

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