Update on the third generation sectional title legislation
By Carryn Melissa Durham
There has been lots of confusion regarding the third generation sectional titles legislation. Some of the questions I am often asked are:
- Are the new Acts in operation?
- What aspects of sectional title will these new Acts deal with?
- What new features will these Acts introduce?
Both the Sectional Titles Schemes Management Act 8 of 2011 (STSMA) and the Community Schemes Ombud Service Act 9 of 2011 (CSOSA) have been signed into law by the State President, but neither Act is yet in operation. These Acts will come into operation only once the Regulations, made under these Acts, have been enacted, and on a date to be determined by the President by proclamation in the Government Gazette. Mr Themba Mthethwa, who has been appointed as the Chief Ombud, has specifically stated that it is his intention to get both Acts operational this year, 2015. The scheme management provisions contained in the Sectional Titles Act 95 of 1986 (STA) have been re-assembled in the STSMA, while leaving the technical registration and survey provisions in the STA. An interesting development in the STSMA is that the body corporate must establish and maintain a reserve fund in such amounts as are reasonably sufficient to cover the cost of future maintenance and repair of common property but not less than such amounts as may be prescribed by the Minister of Human Settlements. It is not yet certain how the reserve amounts will be established as the Regulations to the STSMA have not been finalised. We hope that the formula will strike a balance between too onerous a requirement on the bodies corporate, and being sufficient for the purpose. Another significant development is that a person may not act as proxy for more than two members.
One of the main features of the CSOSA is the establishment of an Ombud Service. The functions of the Ombud Service are set out in section 4 of the CSOSA and include establishing and maintaining a dispute resolution service, training stakeholders and checking, holding and providing access to scheme governance documentation. In doing so, the Ombud Service will promote good governance of community schemes. A significant effect of the CSOSA will be the improvement of scheme rules. Currently the Registrar of the Deeds Office are not involved in the enforcement or application of scheme rules. The Registrar does not check the rules when they are filed. The Ombud Service will make sure that rules comply with the requirements of the STSMA and that they be reasonable and apply equally to owners of sections put to the same use. Hopefully this blog post has cleared up some of the misunderstandings. Paddocks will keep you posted as soon as there are any developments. Sign up to our newsletter to receive monthly articles relating to hot topics in community schemes. Please post any questions you have in this regard below.
Image source: klikon.com.au
Thinking Inside the Box 
Please can you tell me if the STSM Act 8 of 2011 is now in effect.Septemebr 2016
Thank you
Dear Riana,
Thanks for your comment. No, it’s currently not in effect yet, we are still waiting for this to happen.
Regards,
Paddocks
Thank you so much, I greatly appreciate it.
Please can you advise as to the maximum amount an annual levy may be increased
two years ago our levy was in increased by over 24%we were yesterday told that the increase I n the retirement village would be 12 1/2 % is this lawful considering
we do not get anywhere that amount from our pensions.
Thank you and trust you will be able to help us.
Hi Lesley, the increase is based on an approved budget, not on an arbitrary percentage increase. If the increase is based on increases (for example higher electricity tariffs) that were approved by ordinary resolution of the body corporate it is lawful. Thanks, Paddocks
Does a Scheme registered as sectional title but sold as life rights still needs to adhere to the ST act? Do they need trustees,hold an AGM etc
Hi Wilna, thanks for your question. We answer one question a day on our Facebook page for free. Please Like our Page on FB and re-post your question on our wall. One of our consultants should answer you within a few days. Thank you!
Does the new sectional titles act apply to old schemes as well or only shemes registered after the date of new act?
Hi Theresa,
The new Sectional Titles Act will apply to old schemes as well.
Regards,
Paddocks
We have always had a reserve fund equal to approx. 3 months levies. This has proven to be adequate for ordinary maintenance requirements over a period of about 10 years. The last major renovations contract (repainting the entire complex of 12 townhouse units) was about 10 years ago but all woodwork was repaired and repainted about 4/5 years ago. We have just completed a very necessary major renovations project for which we raised a special levy of R 300 000. Owners contributions were paid over a period of 6 months. We were advised by our managing agents that this was perfectly legitimate but were subsequently ‘reprimanded’ by a lawyer who maintained that maintenance expenditure had to be paid from the normal levy as agreed at the AGM. Clarification will be welcome.
Hi Joce, thanks for your question. We answer one question a day on our Facebook page for free. Please Like our Page on FB and re-post your question on our wall. One of our consultants should answer you within a few days. Thank you!
Reblogged this on SectionalTitle.co.za.
Many ST schemes will be holding their AGMs in the next couple of months. I’d suggest to those schemes which do not already maintain a reserve fund that it would be a good plan to include provision for future maintenance and repairs (as required in Section 37 (1)(a) of the ST Act) in their estimates of expenditure. Making a start on the creation of a reserve fund, although the CSOS Act is not yet in force, will mitigate the effect on finances when the Act becomes a reality.