Thinking Inside the Box

A Paddocks Sectional Title Lifestyle Blog

Levies – can it be determined only according to PQ?

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By Zerlinda van der Merwe

In the majority of sectional title schemes, contributions towards the administrative and reserve funds of the body corporate are raised and recovered in proportion to the participation quota (“PQ”) of the relevant section owned by a member. A member’s allocated PQ also determines the value of their vote, and the extent of their undivided share in the common property within the scheme. In this article, we will focus specifically on a member’s levy contributions, and how the determination of the amount of the contributions can be amended from PQ to another method of determination.

How to amend the determination of contributions levied

In order to modify the PQ, a rule, which will be neither a management nor a conduct rule, in terms of section 11(2) of the Sectional Titles Schemes Management Act 8 of 2011 (“the STSMA”), will be required to be prepared, and approved by a special resolution of the members of the body corporate, and further consented to, in writing, by any adversely affected owner.

Approval of the amended rules

Once the required special resolution is obtained, the approved rule must be submitted to the Community Schemes Ombud Service (“the CSOS”) for examination, in terms of section 10(5) of the STSMA. If following examination of the rule, the chief ombud is satisfied that the amendment is reasonable and appropriate to the scheme, the amended rule will be approved. The amended and approved rule will then come into effect as from the date of the chief ombud’s certificate of approval.

The developer’s rules

In the alternative to passing a special resolution, and prior to the establishment of the body corporate, the developer, at the opening of the sectional title register, may impose the aforementioned rule, which must be disclosed to all purchasers in the scheme in order to be valid and enforceable.

Effect of the rules

As set out in the introduction, the rule will have the effect of varying the method of determination of liability for contributions of the individual members, and it may further, if the rule provides, modify the value of voting of the individual members, relating to the administration and management of the body corporate.

Examples

In practice, we have found that this type of rule is often found in mixed-use schemes, where the PQ’s of units, used for different purposes, have been varied by the developer, or later by the body corporate, as the owners of certain units do not practically share in all the same expenses of the body corporate, or in the same interests relating to the administration and management of the scheme.

If you are an owner or trustee in a sectional title scheme, and have any concerns or queries relating to this topic, feel free to contact the writer, Zerlinda van der Merwe, via email at consulting@paddocks.co.za or on 021 686 3950, for a non-obligation quotation.

Image source: ft.com

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One comment on “Levies – can it be determined only according to PQ?

  1. Dawid Fourie
    September 8, 2018

    Amending the conditions of sectional title, requires the submission and approval of a new sectional plan. Furthermore, such amendment will only augment existing conditions of sectional title. A deletion or modification of the existing conditions endorsed on the Title Deed namely the Sectional plan, requires these conditions to be published for two consecutive months in the government gazette and the document must be open for public inspection and comment from the municipality, neighbours or any other affected party. The Chief Ombud has no business amending conditions of sectional title.

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