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Dysfunctional bodies corporate

6 September 2012

It often occurs in practice that when a conveyancer is instructed to transfer a sectional title unit, it is discovered that the body corporate has never been established or that the body corporate is dysfunctional. From the outset it must be made abundantly clear that no sectional title scheme can function or exist without a body corporate, be it a functional or dysfunctional one.

Section 36(1) of the Sectional Titles Act 95 of 1986 (the Act) clearly provides that with effect from the date on which any person other than the developer becomes an owner of a unit in a scheme, there shall be deemed to be established a body corporate for that scheme, consisting of the developer and such other person(s) who are owners of units in the scheme. A body corporate is a creature of statute and derives its powers, etc. from the Act. Section 36(5) clearly provides in this regard that the Companies Act, 1973 (now 2008) shall not apply to bodies corporate.

The legislator, as far back as 2005, realized that developers of sectional title schemes fail to convene a meeting within the prescribed 60 days of establishment of the body corporate, and therefore introduced a sanction in terms of which, a developer can be imposed a fine, or a period of imprisonment, should it fail to convene the first annual general meeting.

However, this still has not eradicated the problem of bodies corporate not holding their annual general meetings or merely becoming dysfunctional. This is more often than not the case with sectional title schemes comprising of buildings which have been abandoned by the owners of units.

Before a conveyancer can transfer a unit he/she must, in terms of section 15B(3) of the Act, certify that there is a body corporate and that such body corporate has certified that all moneys due to the body corporate by the transferor in respect of the said unit has been paid, or provision to the satisfaction for the payment to the body corporate has been made. Should it transpire that the body corporate was established, but has become dysfunctional, in that there are no longer trustees, etc. to perform on behalf of the body corporate, the following two options are to the avail of the owners of the conveyancer concerned:

The owner can request a special annual general meeting whereby new trustees, etc are appointed and thereby revive the dysfunctional body corporate.

Alternatively, the owner may, in terms of section 46 of the Act, apply to court for the appointment of an administrator. In terms of section 46(3) of the Act, the administrator shall, to the exclusion of the body corporate, have the powers and duties of the body corporate or such further powers as the court may direct.

The stumbling blocks that one might be confronted with regarding the options alluded to, more especially with regard to abandoned buildings, is that one might not be able to obtain a quorum at the meeting and even if the meeting is postponed, and there is not at least two owners present, the trustees will not be capable of being appointed (a body corporate must consist of at least two trustees, the majority being owners). Similarly, with the appointment of an administrator, it will not be possible to serve the notice on the owners if their whereabouts are unknown.

However, one thing is certain, a sectional title scheme will always have a body corporate if same was established in terms of section 36 of the Act, irrespective whether it is dysfunctional or not and must merely be brought back to life or an administrator appointed, the latter being the more expensive route.

Allen West
Deeds Training
Pretoria

Reader Comments: 11
Zelna le Roux 07/09/2012:

I have a question regarding duet sectional titles. I am one of the owners in a duet sectional scheme. As there are only 2 units in the scheme, no common property (as the units have their own exclusive use areas) the body corporate is not at all functioning. Every owner has his own insurance, levies etc. which are paid by each one directly. The buildings are not joint at all and each have the use of his unit and exclusive unit as if the property has been subdivided.  What will be the function of a body corporate?

Allen West 10/09/2012:

A sectional title scheme cannot exist without common property. Please refer to the definition of a unit in the Sectional Title Act 95/1986. Your section does not include the land, the roof, the exclusive use areas etc.  Please note the body corporate is established and must manage the common property I refer you to a book titled "Demystiyfying Sectional Titles" by Marina Constas which will greatly assist you in this regard.

Tim Raaff 04/10/2012:

A question I hope you can answer; I purchased a unit in 2007. One of the features of this complex was the laundry facility, this included a coin operated washing machine and tumble dryer, having this facility meant I could install a dishwasher in my unit as there is only place for one appliance. 3 weeks ago the washing machine broke down. The trustees advised members that the machine would be repaired. Yesterday the trustees advised owners that the washing machine was irreparable and that they would not be replacing it. I wrote to the managing agent expressing my unhappiness at such a decision. In their response they claimed that the machines were underused and that it would be unfair on other members for them to carry the cost. I need to know what my rights are in this regard.

Indira 10/10/2012:

My sister lives in a sectional title complex comprising 4 units. The other 3 owners have opted not to use the services of the managing agent they belonged to for several years. Now they are taking decisions on how the money in the kitty is going to be spent. My sister, an owner, has not been made a signatory.  What should she do?

Mike Spencer 26/02/2013:

Regarding duets they are usually dysfunctional in that they never hold meetings, don't have a levy, have individual insurance contrary to the act etc etc. But beware they are still sectional title units. Woebetides when the roof blows off or the unit need repainting - I will ask my neighbour to cough up his share!! Won't he be suprised!!! The domicilium of an owner is at at the unit unless they have advised the Body Corporate in writing. So if you don't have an alternative address you can deliver to the unit - even if it is abandoned.

Regarding the washing machine it is again a case of trustees taking a decision without communicating. If they are going to change the way the laundry works it would be far better to call a general meeting or at least send around a circular letter to all the owners asking them to say yes or no to replacing the machines and the costs involved. They would then get the general feeling of the owners and the majority rules.

Drikus Oosthuizen 12/03/2013:

I own a sectional title unit in a complex of 8 units. The body corporate took a decision in principle in 2009 the rebuild the garages of the complex. There were no approved plans or quotations at that stage so no expenditure were approved. A prolonged process followed to get plans drawn up and approved and get quotations. Since 2009 no agm or special meeting were held to discuss to process or to approve any expenditure. Now, after 4 years the body corporate decided to go on with the project and expect of each owner to pay his part, which is obviously much more expensive than when the original decision was taken in 2009. Can I be forced to pay in the light that no meetings were held since 2009 to discuss the project or approve any quotations.

Hester Kruger 15/03/2013:

The article above by Allen West, does not explain what are the two options to avail of if a Conveyancer needs to sign a Certificate ito sect 15 B(3) and the Body Corporate is dysfunctional. I often come across this scenario and would like to know the correct procedure.

L Claasen 28/05/2013:

I'm in a weird situation I don't fully understand, after two and a half years of living in what's supposed to be a sectional title scheme we have no body corporate at all, we tried setting up a home owners association in the area but only to have some people stop it, we no found out that some people aren't sectional and that its a hybrid or some other word neighbourhood.

Also we were under the impression that we had structural insurance that we needed to use now, but then when we got to the bank we had none on our home loan and it turns out our home loan is a building loan... Is there a body I could speak to about my situation?

Dudley Lee 30/05/2013:

Mr. West is perfectly able to look after himself, but please allow me to draw attention to the fact the Mr. West assists on this forum with information regarding registration procedures in the Deeds Offices and matters related to that. He cannot provide legal advice except maybe to a very limited extent insofar as his situation allows. He is a civil servant and not an attorney. Please see your attorney or conveyancer regarding the questions posed on various situations here. They are indeed real problems but replying to them is not within Mr. West's "job description", if I may put it like that. Mr. West is not rude when not replying - he cannot be your attorney on this forum.

Peter 30/11/2015:

What happens if all the trustees resign from a body corporate and no member agrees to the duties going forward?

Jorge 17/10/2016:

Can a sectional title complex demarcated by a boundary wall have more than one body corporate? There are at least 4 different body corporates in this one complex. The developer as left open land and every now and then decides to build another unit, inconveniencing everyone with building, workers, rubble, etc. This has been going on for 9 years and there is no end in sight. Is this allowed? The developer who owns the open land, is making no contribution to security, rates and taxes, up keep, etc. of the properties he owns, is this allowed and fair? all costs are being absorbed only by some of the "various body corporates.

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