A Paddocks Sectional Title Lifestyle Blog
By Dr Carryn Melissa Durham
I was inspired to write this article after reading a recent post on the Paddocks Facebook page.
The questions which arise from this post are :
What does the legislation say in this regard?
Prescribed Management Rule (“PMR”) 31(3) states that the trustees must, within fourteen days after each annual general meeting, advise each owner in writing of the amount payable by him or her in respect of the approved budget, whereupon such amount shall become payable in instalments, as determined by the trustees.
In terms of section 37(3) of the Sectional Titles Act 95 of 1986 (“the Act”) the body corporate must, on the application of an owner or mortgagee of a unit, or any person authorized by such owner or mortgagee, certify in writing
(a) the amount determined as the contribution of that owner;
(b) the manner in which such contribution is payable;
(c) the extent to which such contribution has been paid by the owner; and
(d) the amount of any rates and taxes paid by the body corporate in terms of section 51* and not recovered by it.
*Section 51 deals with the valuation of land and buildings and recovery of rates by local authorities
PMR 35 is also relevant in this regard, and states:
“(1) The trustees shall cause proper books of account and records to be kept so as fairly to explain the transactions and financial position of the body corporate, including-
(a) a record of the assets and liabilities of the body corporate;
(b) a record of all sums of money received and expended by the body corporate and the matters in respect of which such receipt and expenditure occur;
(c) a register of owners and of registered mortgagees of units and of all other persons having real rights in such units (insofar as written notice shall have been given to the trustee by such owners, mortgagees or other persons) showing in each case their addresses; and
(d) individual ledger accounts in respect of each owner.
(2) On the application of any owner, registered mortgagee or of the managing agent the trustees shall make all or any of the books of account and records available for inspection by such owner, mortgagee or managing agent.
(3) The trustees shall cause all books of account and records to be retained for a period of six years after completion of the transactions, acts or operations to which they relate: Provided that minute books shall be retained for so long as the scheme remains registered.”
The body corporate has different responsibilities with regard to making financial information available to members of the body corporate. Section 37(3) requires the body corporate to certify in writing the details relating to contributions, while PMR 35 only requires that the body corporate keep an individual ledger account in respect of each owner and make the books of account and records available for inspection. Nevertheless, none of the above mentioned provisions actually require that the trustees or where appointed, the managing agent send out monthly levy statements. Therefore, there is no provision which requires that levy statements be sent out every month.
However, each body corporate may decide to act differently in this regard, depending on the size and nature of the scheme; whether the scheme is self-managed and has trustees capable of producing accurate levy statements; whether it employs a managing agent; whether the managing agent’s contract includes the duty to send out monthly levy statements; and what has historically been done in this regard.
In my view, the trustees (or managing agent) should send monthly levy statements to each owner to ensure open and transparent governance. Furthermore, the levy statement should contain separate line items for:
My reasoning is that where owners are in arrears, and the body corporate hands the defaulter over to an attorney for debt collection, the Magistrate will be in a better position to establish for what amounts the owner is in arrears and liable for, to the body corporate.
If you have any queries in this regard, please contact me at firstname.lastname@example.org.