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17 Oct 2006

A Property24 user writes in with some questions about sectional title body corporates. Our new sectional title expert Hannes de Beer of Wierda Property Services provides the answers.

User: I have a question. Shouldn't the Annual General Meeting take place during May/June of each year. As far as I know notice must be given of the annual meeting at least 2 weeks before the meeting takes place.

Can the Body Corporate postpone it till October 2006? Notice was received by the owners only 7 days before the meeting, and the time for the meeting being 17:00 at the Body Corporate's Offices is unreasonable due to the fact that many of the owners are working out of town and only get home at 18:30.

The notice we received stated that the levies have been increased due to insurance and rates and taxes. Can we request proof of the increase insurance and rates and can we request that the meeting be held at the premises? Can we also request a time that suits most of the people?

Can we also nominate another Body Corporate and choose not to have a trustee but have all the owners decide on issues regarding the complex?

Hannes's reply:

What is a Body Corporate?
First of all we would like to clarify that, i.t.o. Section 36(1) of the Sectional Titles Act 95 of 1986, the Body Corporate is the association of all owners. Membership to the Body Corporate is involuntary: It arises upon registration of a unit into the owner's name and lapses upon the registration into the name of another. Conversely, if you rent out your property, as the owner of your unit you are the member of the Body Corporate, not the tenant.

Trustees
All owners can be members of the trustees. In small complexes this is normally the case, but in bigger complexes this is just not workable. Management Rule (MR) 4(2) states that all owners shall be trustees until the first general meeting of the members of the Body Corporate as contemplated in MR 50(1) whereupon they shall retire but shall be eligible for re-election.

As far as functions and duties of the trustees are concerned, the trustees are there to manage the Body Corporate effectively. Their most important function is to manage the finances of the Body Corporate properly and maintain the communal property. This general duty includes a host of subsidiary duties, which are assigned to them by the Act and Management Rules, and duties arising logically from such directives, including ensuring that the levies are collected timeously.

Election of Trustees
The trustees are elected at the first Annual General Meeting (AGM) and thereafter at each subsequent AGM and they shall hold office until the next AGM, but they shall be eligible for re-election if they are nominated.

Annual General Meetings

Notice
Management Rule 51(1) of the Act states that an Annual General Meeting should be held within four months of the end of each financial year. Management Rule 51(2) specifies that the financial year of the Body Corporate should run from the first day of March each year until the last day of February each year UNLESS otherwise decided at a General Meeting or by the trustees. My guess is that the financial year end of your complex was "otherwise decided upon" hence the holding of the AGM in October.

Management Rule 54 deals with the giving of notice of General Meetings. It states that all General Meetings must be held within the magisterial district the where the complex is situated, or such other place determined by special resolution of members of the Body Corporate. A notice of a General Meeting must disclose the place, date and time of the meeting, and in the case of special business, the general nature of such business must be summarised.

If a special or unanimous resolution is to be proposed, the notice must disclose details thereof. It is required that specific notice be given of any special business, being business other than mandatory items (a), (b)m (c) or (d) on the agenda.

The Act furthermore states that notice should be given in writing to-
1. Each owner
2. Each holder of a mortgate bond, if the body corporate received notification of the bondholder's interest
3. The managing agent, if there is one.

The notice will be regarded as adequate if given by ordinary post addressed to the owners legal address and to the bondholder at the address on record (domicilium et executandi = the address of the owner's section, unless the owner has notified trustees of a substituted legal address within the Republic.

The Act also specifies that notice must be given at least 14 days before a General Meeting, except in the following circumstances:
1. Where a special or unanimous resolution is required, the notice period is 30 days
2. Where a special or unanimous resolution is required but the trustees are of the opinion that, due to the nature or ugency of the matter, a shorter notice period is justified, such shorter period shall be in order
3. A General Meeting of the Body Corporate may be called on shorter notice than 14 days, provided that it is so agreed upon by all persons entitled to attend. However, obtaining such agreement is in practice often impossible.

Inadvertent omission to give notice to any person entitled so such a notice, or if that person did not receive such a notice, shall not invalidate any proceedings at any such meeting (Ref: Management Rule 54(4) to the Act)

In the case of an AGM, the notice must be accompanied by copies of
1. the insurance schedules
2. the budget
3. the audited financial statements signed by the auditor or accounting officer
4. the chairman's report
5. agenda.

Inconvenient time was scheduled for AGM
My advice to you is to ask around with the other residents and if you find that the proposed time of the AGM is also inconvenient for them, to ask the Chairperson if you could move the meeting to a more convenient time. More often than not the Chairperson realises that it is important for all owners to be present at the AGM and would be more than willing to move the meeting to a time that is convenient for most of the owners.

Insurance Cover
According to Management Rule 29 of the Act, it is the duty of the trustees and the Body Corporate to ensure that the buildings and all improvements on the common property and adequately insured for its full replacement value against the perils mentioned in the Act.

Procuring adequate insurance is one of the first tasks of the trustees after establishment of the Body Corporate. MR 29(1)(a) specifies that insurance must be revised annually. Ahead of each AGM, trustees must prepare the following insurance schedules:
1. A schedule reflecting the aggregate estimated replacement value of all buildings and improvements
2. A schedule assigning the aggregate replacement value mentioned in (1) to individual units according to participation quotas.

The insurance policy must subsequently be modified according to the approved schedules. You would find an increase in the insurance premium in the insurance schedules that were accompanied by the notice of the AGM. With the increase in property values, it is inevitable that your rates and taxes will also increase. It is up to the members of the Body Corporate attending the AGM to approve the proposed levy increase.

Note that the insurance cover referred to here excludes the contents of your home and you will have to take out additional personal insurance for this.

Proceedings at an AGM
The Act is very specific about the proceedings at an AGM and guidelines are given in Management Rule 55 of Annexure 8 to the Act = Management Rules. You can read up on the proceedings and how voting should take place at a general meeting (also at an AGM) by visiting www.wierda.co.za, click on Services and select SECTIONAL TITLE ACT from the drop-down list. Please note that we have drawn extensively on the excellent interpretations found in Tertius Maree's book "Sectional Titles on Tap" (Volume One), published by MCS Publications. The book can be ordered from tertius@section.co.za.

For more information click here to visit the website.

Readers' Comments
Alot of fuss is made by body corporates as to the rules in a complex. I have actually found to my detriment that they aren't really worth the paper they are written on. Even if somebody signs that they accept the rules there is very little a body corporate can legally do to enforce the rules. They can send a guilty party lots of nasty letters etc but have no power when it comes to enforcing a rule. ie if you want to let your dog bark day and night, go ahead. It would take costly legal action to force you to get rid of dogs for example. Nobody can force you to leave the complex and your home for any reason without expensive court cases, even if you are just renting. Go for it, do what you like, you can !!

Christopher Read, Lonehill

There might be very little one can do about the enforcement of body corporate rules but as long as everyone maintains a selfish attitude, we will never move forward in this country.

Sectional title living is unfortunately a way of life. Don't go ahead and do as you please as Mr Christopher Read, Lonehill has advised. Take other people into consideration. Body corporate rules are there to ensure that everyone can maintain as much privacy, personal space and respect within an ever shrinking housing environment.

If you don't like the rules of a Body Corporate then move out! Stop being selfish and start practicing the 3 C's; Consideration, Compassion and Compromise.

C. Davey

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