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Sectional title changes

22 October 2015

Draft regulations laying out how the Community Schemes Ombud Service Act (CSOSA) and the Sectional Titles Schemes Management Act (STSMA) are to be implemented, were recently published for comment in the Government Gazette by the Minister of Human Settlements Lindiwe Sisulu.

Under the Community Schemes Ombud Service Act, 2011 (Act No. 9 of 2011), Regulations on Community Schemes Ombud Service, residents of community schemes will be able to take their disputes to a statutory ombudsman. The service is to be funded in part by tax and an annual levy for the service levied according to the municipal valuation of a unit as prescribed by the Community Schemes Ombud Service Act, 2011(Act No.9 of 2011) Regulations for fees and levies on Community Schemes Ombud Service. Application fees for the service will also be charged.

The Community Schemes Ombud Service Act attempts to address the culture of impunity which exists in some schemes and lays down the duties of scheme executives (a trustee, director, or another person who exercises executive control of a community scheme) in achieving the necessary competency. Fidelity insurance will also be necessary to insure against the risk of loss of money belonging to the community scheme or for which it is responsible, sustained as a result of any act of fraud or dishonesty committed by any insurable person.

Meanwhile the Sectional Titles Schemes Management Act 2011, the Sectional Titles Schemes Management Regulations generally keeps many of the provisions of sections 37 to 48 of the Sectional Titles Act which govern how a body corporate must manage a scheme and introduces some important changes. One being the proposal that body corporates have to set up, in addition to their administrative fund, a reserve fund raised according to a formula based on the size of the reserve fund at the end of a financial year. It is to be used for the maintenance repair and replacement of “major capital items” as listed in a replacement plan to be drawn up and approved by the body corporate at the AGM.

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