Anyone who is considering buying a flat or a complex under sectional title should carefully check the financial status of the scheme before going ahead with the purchase according to Johan Le Roux, marketing director of Propell a company that funds 330 local sectional title schemes with 15 000 units.
Le Roux says that all too often an unsuspecting buyer may buy a unit in a sectional title scheme and may be told that the levy is, say, R700 a month. When the sale is concluded, the buyer discovers that a special resolution was passed by the body corporate increasing that levy by a factor of two or three.
“There is always a danger that people can buy a unit in a sectional title scheme without examining the financial standing of that scheme,” says Le Roux. “Estate agents are sometimes guilty of selling units without doing the necessary research and homework and without advising their clients about the dangers that surround inefficiently-managed section title schemes,” he says.
Le Roux stressed that if a scheme raises a special levy, this does not necessarily mean that its trustees for the managing agent have been incompetent.
Referring to the role of Propell in sectional title schemes, Le Roux says that the company is able to provide funds and assist in a sectional title scheme’s monthly cash flow requirements and can collect levies from owners on behalf of the managing agent or the trustees.
In a separate development, sectional title specialist, Mike Spencer warns that trustees of a body corporate must work within the rules of that body corporate and often make a mistake when it comes to properly maintaining the buildings.
“One area where trustees frequently make a bad mistake is on the exterior maintenance of a building or complex. Rule 37 says that the body corporate (and therefore the trustees) must establish a fund sufficient for the repair, upkeep, control, management and administration of the common property,” says Spencer.
He says that over the years, some trustees have tried to lower the levies by insisting that owners repaint the outside of their own units but this is outside of the provisions of Rule 37 and must not be allowed.
“Trustees have to set a budget, used to calculate the levy repayments, that is sufficient to cover the repainting or other maintenance costs of the outside of all the units. They do not have a choice,” he says.
“Recently, when visiting a unit owner by a foreigner, we noticed that the outside of this property was in a poor condition but all the other units had been freshly painted. Looking at the financial statements for the past year, it was clear that no money had been spent on maintenance by the body corporate.
“I suggest that the trustees for this scheme had been grossly negligent and should be held personally liable because Rule 37 clearly states that the body corporate must maintain the exterior of all units in the complex,” says Spencer.
“Trustees have to be very careful when making decisions to cut corners on the levies charged. It can only be done if everyone agrees to the changes. Otherwise trustees need to stick to the rules,” says Spencer.
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