Mismanaged Complex - What Remedies?

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27 Feb 2013

A Property24 reader asks:

A Property24 reader says their complex has not had an AGM or presented financial statements nor has any maintenance been done. What can owners do?

I have a few questions following the levy question that was asked on Property24 recently i.e. Can levy double and non-paying owners?

Our complex was one of the victims of a fraud case of a property management company about 3 years ago and we lost all our funds due to this. Since then we have all been paying our normal levies, however, no maintenance was done to the common proper of the complex. Then, since our purchase of the property, there has not been any AGM or financial statements stating what our complex’s income and expenditure has been. Is there some law that forces them to do this which I can refer to? It seems like we are paying for levies and it is not being utilised in the manner it should be. 

They have now decided to do some maintenance, however, the trustees expect the owners to pay an additional R100 for the maintenance for the next 12 months. It is a bit concerning to me especially since levies are being paid and not used for expenditure. 

Phil Calothi, owner and Managing Director of a leading Cape Town based managing agent company, Land and Sea Development Services (Pty) Ltd, advises:

The Sectional Titles Act No 95 of 1986 governs how sectional title schemes must be managed in order to be within the law. 

The Act prescribes that an Annual General Meeting must be convened within 4 months of the end of every financial year. At that meeting, the trustees must present audited financial statements for the past financial year which reflect the expenditure (or non-expenditure) during the past year for which the trustees can be held personally accountable. 

They are furthermore also required, at the same meeting, to present their expenditure budget for the next financial year for discussion and approval by the members. 

If your trustees have not complied with the above provisions in the Act, they have broken the law and I would strongly recommend that you appoint a lawyer to assist you in laying the necessary charges against them and to advise you as to what relief you should seek from them in their personal capacities. 

Readers may submit questions to Property24’s Guest Expert panel and/or comment below. We may not be able to answer all questions received, but all will be considered. 

About the Author
Phil Calothi

Phil Calothi

Phil Calothi is the owner and Managing Director of a leading Cape Town property management company, Land and Sea Development Services (www.lsds.co.za).

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