Thinking Inside the Box

A Paddocks Sectional Title Lifestyle Blog

CheatSheet: Summary of Consent Levels for Body Corporate Decisions

sectional title decisionsby Jennifer Paddock

In sectional title schemes there is often confusion about what level of body corporate consensus is required for certain decisions. Is a simple majority enough or do we need a special or unanimous resolution? When is the written consent of all owners required?

I thought I’d give you a summary of some of the decisions set out in the Sectional Titles Act and the Prescribed Rules and what level of consensus is required for them. Please note that this is not intended to be a fully comprehensive list.

Ordinary resolution

(simple majority vote):

  • approval of the budget – PMR 31(2) and 56
  • approval of insurance – PMR 56
  • appointment of an auditor or accounting officer – PMR 56
  • determination of the number of trustees – PMR 4 and 56
  • election of trustees – PMR 56
  • removal of trustees – PMR 13
  • removal of the chairperson – PMR 19
  • appointment of an alternate chairperson to chair a general meeting when chairperson not present – PMR 59
  • appointing a trustee to take the place of one who has been removed – PMR 14
  • the giving of directions or restrictions to the trustees in terms of section 39(1) of the Act – PMR 56
  • the determination of the body corporate’s service address – PMR 3 and 56
  • the decision to approach the court to obtain a unanimous resolution – section 1(3A) of the Act
  • instruction to trustees to appoint a managing agent – PMR 46
  • suing in respect of any contract or damage to the common property – section 36(6) of the Act

Special resolution

(At a meeting – ordinary quorum and 75% in number and value to vote in favour. By round robin – 75% of all owners in number and value to vote in favour)

  • adding to, amending or repealing conduct rules – section 25 of the Act
  • authorising the extension of a section – section 24 of the Act
  • authorising the creation of exclusive use areas in terms of section 27A of the Act – section 27A of the Act
  • cancelling a section 27 exclusive use area – section 27 of the Act
  • making servitudes that burden or benefit the land – section 29 of the Act
  • making rules in terms of section 32(4) of the Act that provide for different voting values or contribution liability (also need written consent of adversely affected owners) – section 32 of the Act
  • suing the developer in respect of the scheme – section 36 of the Act
  • deciding that the body corporate must insure against more than the prescribed risks – PMR 29
  • authorising remuneration for an owner-trustee – PMR 10
  • authorising non-luxurious improvement to the common property (if any owner requests a meeting to discuss and vote on the issue after trustees have notified owners of their intention to proceed with improvement) – PMR 33
  • revoking the managing agent’s appointment – PMR 46
  • deciding to hold a special general meeting outside of the magisterial district – PMR 54

Unanimous resolution

(at a meeting – 80% quorum and all to vote in favour with abstentions counting as votes in favour. By round robin – all owners to vote in favour)

  • adding to, amending or repealing management rules – section 35 of the Act
  • authorising a luxurious improvement to the common property – PMR 33
  • directing body corporate to alienate or let all or part of the common property – section 17(1) of the Act
  • authorising the creation of section 27 exclusive use areas or exclusive use areas in terms of the management rules under section 27A – sections 27 and 27A of the Act
  • decision to cede registered exclusive use rights to owners – section 27 of the Act
  • deciding that the buildings are deemed to be destroyed – section 48 of the Act
  • deciding to rebuild/reinstate buildings if buildings have been damaged or destroyed, or not to do so – section 48 of the Act

Written consent of all owners

  • to exercise or alienate a future development right – section 25 of the Act
  • to purchase or otherwise acquire land to extend the common property – section 26 of the Act
  • to authorise a section or exclusive use area to be used for a purpose other than shown on the sectional plan – section 44 of the Act

Hopefully the above list will be helpful to you. I have done another post on decisions trustees are entitled to make on their own. Click here to read it.

If you have any questions don’t hesitate to ask them in the comments below.

Happy Friday!!

Advertisements

40 comments on “CheatSheet: Summary of Consent Levels for Body Corporate Decisions

  1. Susanna
    September 25, 2014

    If we want to change PQ of levies how many must be in favor. We 15 units. If 1 or 2 don’t agree could we still change it.

    • paddocks
      September 26, 2014

      Hi Susanna, we answer 1 question per day for free on our FaceBook Page so please Like our FB page and post your question on the wall. One of our consultants should get to your question in a fews days. Thanks so much!

  2. R.Robert
    April 24, 2014

    Awarding EUA’s to certain apartments:

    I read:
    Check if the written consent of any owner is required

    – Does the rule adversely affect any owner’s voting rights or increase his or her liability for contributions (levies)?

    – Does the rule adversely affect any owner’s proprietary rights?

    – If either of these situations seems possible, you may need that person’s written consent and may want to get specific advice from an attorney experienced in sectional title law.

    IN OUR COMPLEX THE TRUSTEES AND WELL CONNECTED OWNERS ‘SECRETLY’ DECIDED TO AWARD EUA’s to the downstairs units, leaving the upstairs units without gardens. As many apartments are let, the owners like me only found out now.

    It is a done deed. Filed at deeds office. The man of r, has threatened us in writing, if we do anything.

    • Dave Hirschman
      April 24, 2014

      If the trustees and well-connected owners constitute 75% of owners – in number and value – I reckon it’s just tough on you remaining 25%. However if not, then it seems owners were not informed of the required Special Resolution and also sounds like someone must have been somewhat ‘economical with the truth’ at the Deeds Office! To be threatened is appalling, but far better in writing than verbally, since you now have proof!! Ms Paddock’s views eagerly awaited.

      • John Bosman
        April 24, 2014

        Hi Dave, As Jennifer wrote in

        http://www.sapropertynews.com/amending-sectional-title-scheme-rules/

        2. Check if the written consent of any owner is required.

        • Does the rule adversely affect any owners’ voting rights or increase their liability for contributions (levies)?

        • Does the rule adversely affect any owners’ proprietary rights?

        • If either of these situations seems possible, you may need those owners’ written consent and may want to get specific advice from an attorney experienced in sectional title law.

        3. Send out notice of the meeting at which the proposed resolution will be considered. The notice must specify the proposed resolution and must be sent to owners and bondholders at least 30 days before the meeting date.

        4. At the meeting, check that the required quorum is present. The quorum requirement will differ depending on whether the proposed amendment is to the management or conduct rules.

        So an EUA cannot be awarded if it affects the proprietary right of an owner, and this owner does not give written consent. This is in fact a basic Property Law concept which seems to overrides the ST Act. Obviously the constitution of SA protects basic property and proprietary rights.

        The bond holders would also have to agree.
        Hi Dave, As Jennifer wrote in

        http://www.sapropertynews.com/amending-sectional-title-scheme-rules/

        2. Check if the written consent of any owner is required.

        • Does the rule adversely affect any owners’ voting rights or increase their liability for contributions (levies)?

        • Does the rule adversely affect any owners’ proprietary rights?

        • If either of these situations seems possible, you may need those owners’ written consent and may want to get specific advice from an attorney experienced in sectional title law.

        3. Send out notice of the meeting at which the proposed resolution will be considered. The notice must specify the proposed resolution and must be sent to owners and bondholders at least 30 days before the meeting date.

        4. At the meeting, check that the required quorum is present. The quorum requirement will differ depending on whether the proposed amendment is to the management or conduct rules.

        So an EUA cannot be awarded if it affects the proprietary right of an owner, and this owner does not give written consent. This is in fact a basic Property Law concept which seems to overrides the ST Act. Obviously the constitution of SA protects basic property and proprietary rights.

        The bond holders would also have to agree.

  3. B.B.
    April 18, 2014

    This cheat sheet is for ST, could you provide a cheat sheet for HOA NPC board please?
    And a cheat sheet for a retirement village that is a HOA NPC – stricter rules???

  4. B.B.
    April 13, 2014

    SGM: EUA’s. – proprietary rights of an owner is affected.
    What about the proprietary rights of owners? If there are only 10 gardens in front of ST units; and there are 10 upstairs units and 10 downstairs units, all units face the gardens, the stairs to upstairs units are from the garden side, and most of the upstairs owners are coerced into voting to give up their access to the gardens. All owners, upstairs and downstairs pay for water and upkeep of gardens.
    Can a SGM then allow the 10 downstairs owners to annex the ( only) gardens? Previously Jennifer had written in an article that written permission is required if the proprietary rights of an owner is affected.
    Yes, we do have copies of sms’s messages by downstairs threatening an upstairs owner. Another email from chairman , telling unhappy upstairs owner to “f…. Off”.yes in writing in an email.
    So much for democracy in ST
    But the basic principles of Property Law can surely not be altered by a ST SGM?

  5. June Edwards
    April 11, 2014

    Hi Jennifer. According to local authority plans devision, to comply with a new ST building regulation, we have to add a parking bay because two sections, are being consolidated, resulting in the “loss” of a garage. We must have one parking garage or bay per unit. The only position for such an added parking bay would be on common property. Will consent for this have to be from all owners? At a SGM? And what type of resolution (if necessary) will it require?

  6. paddocks
    April 4, 2014

    Hi Dave, in our view LUPO has no bearing on the extension of a section onto the common property – section 24 of the Sectional Titles Act is the applicable provision 🙂

    • Dave Hirschman
      April 4, 2014

      Hi Jennifer,
      I would accept your opinion – again with relief – but for the fact the Council Planner referred me to another similar case, An extract reads:
      “…..It must be noted that the extension of the flat is proposed in common property (as opposed to within a section). As all of the owners (of all the sections) together own the common property in subdivided shares, ALL of the section owners must consent in writing to the submission of a departure application. …..(Related to this…..nor can the resolutions provided for in the Sectional Title Act be used in terms of applications made in terms of LUPO, which is completely separate legislation). ….”
      I’ve been trying to establish who wrote the above, so far without success.

  7. Dave Hirschman
    April 3, 2014

    Hi Jennifer
    I have just read in an article that a letter of Special Resolution must be hand-delivered or sent by registered post. Can it not be emailed to all owners?

    • paddocks
      April 3, 2014

      Hi Dave, interesting question – I presume the article you read relates to section 1(2) of the Sectional Titles Act which deals with the notice procedure for a meeting at which a special or unanimous resolution is on the agenda. This provision states that notice of that meeting will be “deemed adequate” if hand delivered or dispatched by prepaid registered post. However, as you probably know, special resolutions can also be taken by ’round robin’ procedure ie. in writing, and the definition of a ‘special resolution’ in terms of section 1(1) of the Act which deals with the requirements for a round robin special resolution does not specify how that resolution must be sent to owners. Therefore in my opinion, a proposed special resolution could be sent out to all owners by any means (including email) and provided 75% of all owners agree in writing to the resolution – it would have been properly passed by round robin procedure.

      • Dave Hirschman
        April 3, 2014

        Hi Jennifer,
        Thanks for your incredibly prompt reply; your answer is a relief! On the same subject, I have always understood that an extension of a Section into Common Property requires a Special Resolution (75% approval). A senior planner at Council told me that due to some court case, unanimous approval is now required in terms of LUPO, Another senior official then then told me that in his opinion, LUPO only gets invoked when a departure is involved, and since a Section extension isn’t a departure, the 75% approval requirement still prevails.I feel thoroughly confused and exasperated, since this isn’t just an academic issue – it involves a real application.

  8. Peter Warren
    January 27, 2014

    Section 42(4) of the Sectional Titles Act

    The blogs indicate that a special resolution is required to change the default PQ basis for levy calculation if the developer has not made a determination. But what if he has, can that determination be changed by special resolution? To a layman that appears to be the logical way.

    And could the developer make it explicitly part of the Management Rules to attempt to ensure that a unanimous resolution is required? To a layman this sounds absurd; if you can make it one way you can change it the same way. In any case how can the developer override the Act?

    • paddocks
      January 29, 2014

      Hi Peter, you’re questions require quite an in-depth answer which is not suitable for the comments section of the blog. In short – if a developer has changed the effect of the PQ, the BC can later amend this by following the requirements of section 32(4) which is more than just a special resolution. It also requires owners adversely affected to give their written consent and that the BC cannot make such an amendment until such time as there are owners other than the developer of at least 30% of the units in the scheme.
      To answer you second question – no. The management rules cannot be amended to contradict the requirements set out in the Act. Hope that helps!

      • Peter Warren
        January 29, 2014

        Hi Jennifer, The key issue is that amendment follows the same process as an new application, that is as specified by 32(4). Thanks so much, it is all exactly as I understand it. I knew about all the other conditions onerous as they may be.

        The trustees here lost their bid for a the unnecessary unanimous resolution and completely ignored my reference to the Paddocks articles regarding correct procedure. I feel they have let us down.

        Also congrats on the cheat sheet. So clear so logical.

      • paddocks
        January 30, 2014

        Thanks Peter 🙂

  9. Pingback: Unanimous Resolutions – How to Pass them PROPERLY | Thinking Inside the Box

  10. Manfred S
    September 20, 2013

    Hello there,
    if EU rights are -mobster style- declared in terms of section 27(A) within Conduct Rules, BUT such EU rights alienate the size of a parking bay to the Rand value equivalent of R54,000, does section 17(1) alienation of property rights catch? Or can trustees get away by declaring half-size parking bays in turning bays, obstructing garage access and egress of s single owner, otherwise suggesting a two-third size parking bay at the other end of the complex, alienating about R34,000 and, to add insult to injury, give a partially disabled the walking distance of about 90m to the doorstep out of sheer spitefulness?
    Thanks for your clarification.
    Kind regards

  11. Mike Chiles
    September 18, 2013

    The “cheat sheet” is brilliant and certainly helps in tying down some loose ends.

    What is the definition of “luxurious improvements”? Would tiling stairs and landings in a stairwell which have always been painted either black or grey be considered “luxurious”? The problem with painting stairs and landings is that they need to be repainted every few years while tiling them is a long term solution.

    • paddocks
      September 18, 2013

      Hi Mike. I’m so glad you find the cheat sheet useful 🙂 There is no official definition for a ‘luxurious’ improvement versus a ‘non-luxurious’ improvement. But the general consensus amongst many in the sectional title industry is that if the improvement is desirable, but not necessary it will be considered luxurious whilst if it is necessary it will be non-luxurious. If you could show through a costing analysis that the initial cost of tiling the landings would save money over the course of a few years then you may be able to justify it as a non-luxurious improvement…

  12. Shirley Baillie
    September 9, 2013

    Hi Jennifer
    I thought your lists of decisions that can be taken by Trustees and resolution – making was excellent. So useful to all .

    Could you enlighten me regarding into what resolution the following would fall:

    – our trustees decided that instead of taking out retirement or provident policies for our staff with a recognised institution,, they would have a reserve fund to which they would contribute each year so that the staff leaving would receive 50% of the last year’s salary times the number of years they have worked. This is now amounting to a very large sum for the caretaker, who has a salary way above his capability and he has been here a long time. (But then he is “well connected” with the Chairman and his sister has been a trustee for many years.!!) As this money is substantial, I am concerned but even more so, the principal correct does not seem correct to me.. This was only agreed by the Trustees and told to the owners as a completed fact. The trustees have refused to allow the owners to know what the salaries of the staff are ( which I know is not correct), and I think most owners would be horrified at the “golden handshake” this caretaker is going to get.

    Shirley Baillie

    • paddocks
      September 18, 2013

      Hi Shirley, this situation sounds and smells really ‘off’ to me. The potential conflict of interest with the caretaker’s sister being a trustee, the withholding of information regarding the staff salaries… The only way I can see this being above board is if the arrangement is completely transparent and the owners are approving these amounts going into the ‘reserve fund’ which will be used specifically for staff leaving fees.

      So glad you’re finding the blog useful! 🙂

  13. Pingback: CheatSheet: Trustee Decisions | Thinking Inside the Box

  14. J Davis
    September 1, 2013

    I am extremely confused :
    1. Was section 27 A not repealed by Act No. 8 of 2011: Sectional Titles Schemes Management Act, 2011 which was signed on the 14 June 2011. Is this Act not yet in place?
    2. Your article refers to section 27 and 27 A under both special and unanimous resolutions. Which is applicable.
    3. If the allocation of exclusive use areas be only subject to a special resolution can 80% of the members act as a mob and allocate themselves or part of the mob sole rights to the exclusive use areas to the exclusion of others ?

    • paddocks
      September 2, 2013

      Hi J Davis, I’ll answer your questions in order:
      1.The STSM Act, 2011 is not yet in operation. It has been signed by the President but its Regulations have yet to be approved and therefore is not yet in operation. The Sectional Titles Act 95 of 1986 is still the applicable law.
      2.Section 27 EU rights can only be created by unanimous resolution, whereas section 27A refers to EU rights made in terms of the ‘rules’ therefore under section 27A EU rights can be created in terms of a scheme’s management rules by unanimous resolution OR in terms of a scheme’s conduct rules by special resolution.
      3. Theoretically yes.

  15. Gregory Gird
    August 31, 2013

    Hi, one other thing that could be usefull in the list would be at what type of meeting what decision could be made, AGM SGM or Trustees

    • paddocks
      September 1, 2013

      Hi Gregory, thank for the suggestion. I will include it when I get a chance. All the decisions listed in this post are BC decisions, ie. only made by owners, either at the AGM, an SGM or potentially by round robin procedure. None of the decisions in this post can be made by the trustees alone. I am posting a CheatSheet on trustee decisions tomorrow so if you haven’t already you can subscribe to the blog to get email notification of the post. Enjoy the rest of your day 🙂

  16. Sandy Masterton
    August 30, 2013

    I look forward to the list detailing decisions which trustees are entitled to make on their own. Thank you for the cheat list.

    • paddocks
      August 30, 2013

      Hi Sandy, I will be posting the Trustee Decision Cheat Sheet on Monday, so if you haven’t already I suggest you subscribe to the blog so that you get an email notification as soon as it’s published. Have a lovely weekend 🙂

  17. Paul Martin
    August 29, 2013

    I am a new-comer to the ST scene with little experience and a lot to learn. With reference to a “Special resolution” my interpretation has been that a quorum of 75% is required, as well as a 75% “yes” vote of those present (i.e. 56,25% of all members). As indicated in the “CheatSheet” however, it means that with an ordinary quorum (50%) of which 75% give a “yes” vote, the special resolution will be taken by only 37,5% of all members. Is this correct?

    • paddocks
      August 29, 2013

      Hi Paul,
      There is no raised quorum required for a general meeting at which a special resolution is to be considered, so your ordinary quorum requirement (of 50% if there are between 2 and 10 units in the scheme) applies and it is only then 75% (in number ie. show of hands, and value – ie. PQ) of those present and represented at the meeting that must vote ‘yes’. So it’s actually easier to pass a special resolution at a meeting than you think!

  18. Alan Phillips
    August 29, 2013

    Thank you very much for the informative Cheat Sheet.
    I was under the impression that the Trustees were empoyered to cancel a Mananging Agents contract? On condition a Trustees meeting has been property constituted ( quorum, notice etc) the Trustees may make the decision to replace the Managing Agent. Please clarify the situation. Regards Alan.

    • paddocks
      August 29, 2013

      Hi Alan,

      Yes, in terms of PMR 46(1)(b) the managing agent’s contract can be cancelled in terms of a resolution taken at a trustee meeting or an ordinary resolution taken at a general meeting of owners. So either way! I’ll update the cheat sheet to include that 🙂

  19. Karen Miles.
    August 29, 2013

    Hi,
    It would be helpful if you could put rule no/section no, next to each point.

    many thanks i enjoy the blog.

    regards,

    Karen.

    • paddocks
      August 29, 2013

      Thanks for the suggestion Karen – I will do so when I get a chance 🙂

    • paddocks
      August 30, 2013

      Hi Karen, I have updated the post with the relevant prescribed rule and section references 🙂 Have a good weekend!

  20. moiraharper@yebo.co.za
    August 29, 2013

    Morn. Tks for all the info on Cheatsheet, very useful. I live in front of a huge water feature (fountain 5m x 8m) which is on common property for all residents to enjoy. This fountain serves as “white noise” to us permanent residents who have enjoyed this feature for 10 years. The Chairlady + Trustees have decided to put a timer on to save costs which is a problem for me and is becoming “you said, I said between us all”. Their final decision is to leave timer on – I have said I will contribute towards running costs, their final decision is no – Trustees have made a decision and answer is no. I wld appreciate this question + answer in your Sept newsletter? Kind regards, Moira.

    • paddocks
      August 30, 2013

      Hi Moira, I’m not sure I understand what you are asking. Could you rephrase the question please and I will try to help! Thanks.

  21. J G Coetzee
    August 28, 2013

    The alternative view is:

    – Adding or amending a conduct rule which affects the proprietary rights of an owner should be by unanimous resolution.

    – A unanimous resolution is required to create exclusive use areas, which by definition alienates common property.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow us on Twitter

Address:

+27 (0)21 686 3950
Mon - Fri
8am - 5pm

Enter your email address to follow this blog and receive notifications of new posts by email.

Join 444 other followers

%d bloggers like this: