Community Scheme Ombud Service – An Overview
An overview of the ‘CSOS’ by Prof. Graham Paddock of Paddocks, the Consultants to the Government on the legislation:
The Community Scheme Ombud Service Act, No. 9 of 2011 (“the Act”) will come into force on a date to be fixed by the President by proclamation in the Gazette.
In terms of the Act the term “community schemes” includes:
1. Sectional titles development schemes in terms of the Sectional Titles Act (Act 95 of 1986);
2. Share block companies governed by the Share Blocks Control Act (Act 59 of 1980) and the Companies Act (Act 61 of 1973), soon to be replaced by Act 71 of 2008;
3. Home or property owner’s associations, whether constituted as companies under the Companies Act or as common law associations, established to administer property developments;
4. Housing schemes for retired persons in terms of the Housing Developments for Retired Persons Act (Act 65 of 1988), and
5. Housing co-operatives under the South African Co-operatives Act, 2005 (Act 14 of 2005)
as well as any other scheme or arrangement in terms of which there is shared use of and responsibility for parts of land and buildings.
This Act is a very significant development in the South African law applicable to the administration of real property in that it recognises a wide range of different legal arrangements currently used to provide urban housing and shared facilities as being part of a new legal class, the “community scheme”.
The purposes of the Community Scheme Ombud Service (the “Service”), set out in clause 4 of the Act, can be summarised as being to:
(a) provide a dispute resolution service with national reach for community schemes;
(b) train conciliators, adjudicators and other Service employees;
(c) take custody of, control the quality of and provide public access to all sectional titles scheme governance documentation and any other such documentation determined by the Minister; and
(d) promote good governance of community schemes and monitor that governance;
(b) provide education, information, documentation and services to raise awareness of owners, occupiers, executive committees and others who have rights and obligations in community schemes.
DISPUTE RESOLUTION
When a community scheme’s governing body (defined in the Act as the “association”), an occupier or an owner has a dispute with any other person who also has a material interest in that scheme in regard to the administration of that scheme, they will be able to approach the Service for assistance in resolving that dispute. The envisaged process involves the prior use of internal dispute resolution mechanisms. Where these prove ineffective and a dispute is referred to the Service, the first option will be professional conciliation, but where this fails or seems unlikely to succeed, the matter will be referred to an adjudicator for fast-tracked resolution.
In line with international best practice, the Act does not give the Service unlimited jurisdiction in the sphere of community scheme administration disputes. The dispute must fall into one of the categories set out in section 38 of the Act under the headings: Financial issues; Behavioural issues; Scheme governance issues; Meetings; Management services; Works pertaining to private areas and common areas and General and other issues.
TRAINING OF CONCILIATORS, ADJUDICATORS ETC.
The Act recognises that the skills necessary to operate the dispute resolution processes may not be generally available at reasonable cost and therefore specifies that one of the Service’s functions is to train conciliators and adjudicators. The persons who carry out these functions on a full or part-time basis will need a working knowledge of the law and practices involved in the operations of the relevant community schemes as well as in the processes of investigation, conciliation or adjudication.
It is inevitable that some of those trained by the Service will use their skills in other contexts. When they operate outside the Service, these people’s skills will serve to raise the general level of understanding of the operations of community schemes in South African society and in this way further the overall objects of the Service.
GOVERNANCE DOCUMENTATION
The governance documents for share block schemes, for property and home owners’ associations that are incorporated as companies and for housing co-operatives are kept and controlled by the Companies and Intellectual Property Commission. Such documentation for sectional titles schemes, including those retirement developments that are sectional titles schemes, is filed at Deeds Registries. But since 1997 the quality of the documents filed with the Registrars has not been examined or controlled, and in many instances documentation in the sectional title registers has been unauthorisedly amended or removed.The governance documentation for home owners’ associations that are common law associations is sometimes kept by local municipalities, but is not reliably updated or generally accessible. The governance documentation for retirement developments that operate on a contractual “life-rights” basis are not checked or kept by any government or local municipality.
The Service’s role in ensuring that scheme participants and role-players have reliable and ready access to their community scheme governance documentation will be a major factor in improving the operation of community schemes.
MONITORING
The Act makes provision for annual returns that must made by community schemes to the Service, including copies of a scheme’s annual financial statements.
At present there are many community schemes that operate without regard for the requirements of their governance documents and any statutes that may govern their operations. The fact that community schemes will have to prepare annual returns to the Service will serve as an annual reminder to scheme executives and managing agents of the necessity to comply with the requirements of these provisions.
RAISING AWARENESS AND EDUCATION
Finally, and again in line with international best practice in “strata” and “condominium” schemes, the Act recognises that it is important to educate those who have rights and obligations in community schemes and to raise awareness amongst them so as to prevent disputes, a significant number of which are caused by a lack of information and understanding of community schemes.
What are your thoughts on the CSOS? Share with us by commenting below.
Thinking Inside the Box 
Good day. Please can one offer me some advice. I live in an estate. I was recently told by the Home Owners Association members that the HOA can refuse entry to anyone coming to visit me if they think he or she is a security risk…this topic came up because a building contractor came to see me after hours…he did not come to do work on my property but was coming to visit me. Because the security guards knew him as a contractor…they refused him entry…he and I explained to the guards that even though it is 18:00pm…it was a personal visit…my question is…Does the HOA have such authority to refuse my guests entry…to me it sounds wrong…furthermore, is their an Ombudsman or association I can take this up with?
Dear Dean,
Thank you for your comment. We are more than happy to help, however we do not give free opinions / advice. Please email us on consulting@paddocks.co.za with regards to your matter, and we can provide you with a no-obligation quote, so that we can assist you.
Kind regards,
Paddocks
Good day,
I have the following questions please.
Must a home owners association take out insurance as is the case with sectional title against fraud ?
Must an auditing firm be used for annual financials. We currently have EXCOM members auditing the financials.
Must home owners association have a reserve fund as is with sectional titles ?
Thank you
Hans
Hi Hans,
Thank you for your comment. Please email us on consulting@paddocks.co.za with regards to your matter, and we can provide you with a no-obligation quote, so that we can assist you.
Kind regards,
Paddocks
please what can i do if i was summoned for levy,s and electricity that was not outstanding but paid on date
Hi Stephanie,
Thank you for your comment. Please email us on consulting@paddocks.co.za with regards to your matter, and we can provide you with a no-obligation quote, so that we can assist you.
Kind regards,
Paddocks
Please clarify.
CSOSA Regulations – Fidelity Insurance 15 (3) Minimum amount of the fidelity insurance cover required is the total value of –
(a) investments and reserves at the end of the last financial year… and
(b) 25% of the schemes operational budget for the current financial year.
STCMA regulations state 23 (7) A body corporate must take out insurance for an amount determined by members in a general meeting to cover the risk of loss of funds…..
Which is correct for a body corporate?
Hi Kim,
Thank you for your comment. Please email us on consulting@paddocks.co.za with regards to your matter, and we can provide you with a no-obligation quote, so that we can assist you.
Kind regards,
Paddocks
In formulating your complaints about S T Trustees and Managing Agents do not forget that ‘POCA’ Prevention of Organized Crime Act, Act 121 of 1998 together with Prevention and Combatting of Corrupt Activities Act, Act 12 of 2004 applies as well. Section 34 of Act 12 of 2004 requires managing Agents to report any corrupt activities, such as the Trustees ganging up as defined by POCA and favouring some owners by way of a gratification (defined in the Act, apply.
The Constitution of S A is the Supreme Law and S A is to be governed according to the rule of law, which includes the above 2 acts
Errol
Any progress regarding this Ombud office. We also have Directors/Trustees who are like the Mafia.
yes,they behave like sole owners ,above the law , MAFIA.
I APPLIED for dispute resolution. ombudsmen service were very helpful, but unfortunately, can not proceed since they awaiting for the president to proclaim the act. the TRUSTEES did not even respond to the ombudsmen office. So much of power they think they have. untouchables…..WORSE THAN MAFIAS.
REALLY FRIGHTING THE DAMAGE TRUSTEES CAN DO.
WE DESPERATELY NEED INTERVENTION FROM CSOS.
good day, please can you advise, do homeowners associations fall under the prescription act?
Hi Lovina,
Yes, the Prescription Act does apply to Homeowners’ Associations.
Regards,
Paddocks
How does one contact the Ombud? We live in a life rights retirement complex and our levies have just been hiked by a whopping 20% which we feel is grossly unfair as little or no explanation is given as to how the Board of Management arrive at this figure. I would appreciate it if someone could provide me with contact details for the Ombud. Thank you
There is a desperate need for such a body in order to ensure that the relevant bodies, including those offering management services are kept in check. Is there no group that can formally lobby government into accelerating the process of finalising the act?
we are on it we should be able to be operational by 1st april 2015
Hi Themba, any further news on when the Ombud act comes into force? An, more importantly, where/how does one contact them to resolve issues? Thank you
I think this is great. Any idea weather they will open Provincial Offices and more notably an office in Durban?
yes Durban office will soon be openen when the service is launch before Aprik 2015
when will the sectional titles schemes management act 8 of 2011 come into operation?
Hi Pieter, that is the million dollar (or should I say ‘rand’!) question. The Chief Ombud is meeting with Paddocks on Wednesday so hopefully we’ll have a better idea after that meeting. I plan to do a blog post updating everyone on the progress of the CSOS after the meeting so keep an eye on the blog.
when the President announce the date of operation soon after the appointment of council members
Hi Themba,
Is the office of the Ombud now operational in Johannesburg? I have a problem with the Trustees and the Managing agent who harrass and victimise me so much so that they have driven me out of my house. Please advise me on how I can address this issue? Thank you!
Cynthia, whilst CSOS is put its house in order, please refermthe matter to EAAB
Can you kindly inform what does EAAB means and how do one contact them?
In the meantime… Is the EAAB still the body to take complaints to regarding misbehaviour by managing agents? What do you do if they are in cahouts with trustees and you cant vote them out, and they enable the trustees to harass body corporate members?
Hi Cynthia, did you have any success regards your complaint?
Hi Catherine, nope never received a response – situation is ongoing… 😦
I would agree with Thomas…..With corruption and negligence among the body corporate trustees,together with it the legal cost to refer any dispute to court, bigger Concern is ,how efficient the Om bud office will be.The act itself is a glimmer of hope for scheme investors and i am waiting now for eight years for such an act…..cant wait for its full implementation…….what will be the procedure to lodge a complain and how do we get assistance?
How does the consumer protection act, the law / regulation of clear and simple language and the company’s act for HOA NPC fit in with the ombud act?
I just do not comprehend why gazette an Act and three years later it has not yet been implemented.
Hi Thomas, we share your frustration – as I understand it the hold up is the Regulations which have not yet been approved… The CSOS seems to have sorted out its financial issues now so hopefully it’s priority will be getting these Regulations through parliament so the Acts can come into force asap. We’ll keep you posted!