The Sectional Titles Act of 1986 ("the Act") distinguishes between maintenance of the common property and improvements to the common property.
The Body Corporate is, in terms of the Act, compelled to maintain the common property and keep it in a state of good and serviceable repair. Examples of the common property are the outside walls of the buildings, foyers, staircases, hallways, lifts and lift shafts, gardens, parking bays and other open areas of the common property.
The maintenance of these areas would include painting, cleaning, repairing, servicing of the lift, cutting grass and tending to flower beds and maintaining the surface of the parking areas.
Improvements to the common property go beyond the scope of maintenance. The Sectional Titles Act does not provide examples of improvements to the common property but typical examples are the building of a wall around the scheme, electrifying fences, upgrading tarred driveways to paved driveways, installing swimming pools, improving the landscaping of the gardens and so forth.
The Body Corporate must make provision for maintenance expenditure in its budget every year but in many cases where a substantial expense is going to be incurred at once, for example when the entire scheme has to be repainted, the trustees will often have to raise a special levy in order to have enough money available to attend to such an expense. Expenses like these are usually unbudgeted for and therefore a special levy has to be raised.
It is possible that the Body Corporate will have enough reserves available to pay for the painting of the scheme, but in most schemes it will be unlikely and a special levy will have to be raised.
In circumstances where schemes have substantial reserves available and a decision is made by the trustees to make improvements to the common property, many trustees fail to take into account the provision of the Act that all improvements to the common must be sanctioned by either a unanimous or special resolution, depending on the nature of the improvements.
The fact that the scheme does have money available for improvements and therefore does not have to raise a special levy to pay for such improvements does not negate this provision of the Act that all improvements, whether luxurious or non-luxurious, have to be authorised by a unanimous or special resolution respectively.
The availability of funds to effect improvements to the common property might convince owners more easily to vote in favour of such improvements but no improvements can be effected by the trustees without being duly authorised thereto by the owners, irrespective of whether a special levy will have to be raised to effect the improvements. The only exception to this rule is the installation of service meters, which requires a majority vote by the owners.
The difference between luxurious and non-luxurious improvements is in many instances subjective and even the location of the scheme could have an influence on the nature of the improvements. In general, if an improvement is not necessary at all, it would in all probabilities be regarded as a luxurious improvement to the common property, which has to be approved by a unanimous resolution of the members. – Judith van der Walt
Judith van der Walt is an attorney, notary and conveyancer at Paddocks, a specialist sectional title firm operating throughout South Africa. Visit www.paddocks.co.za or call 021 674 7818.
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It may be necessary to look closer at the Act and its composition and the spirit of the Act before making comments on the difference between maintenance and improvements.
The Act clearly provides room to manage common property so that it does not fall apart or infringe on the constitutional rights of the owners. It also provides protection for the proprietary rights of the owners and abuse by inconsiderate Trustees.
The two major sections in the Act are made up of management and conduct rules. Cross reference is made continuously to corresponding clauses to keep perspective of the meaning of a rule. It takes about two hours to read through it properly and then most people with a driving license will understand it.
The section on the duties and powers of the body corporate spells out what goes into the estimate for the budget which is drawn up annually before the Annual General Meeting (AGM) and presented for approval. The Trustees are a select few people who act on behalf of the body corporate but are limited to the same rules. Any shortfall on the items allowed in the budget may be covered by raising a Special Levy. The only other allowance for Special Levy is for judgment debt.
The section on improvements was included for a specific reason. The fact that it was divided into luxurious and non-luxurious has a further meaning. Reading the rules of budgeting levies forms a picture that provides for keeping in good serviceable repair and renewal of specified items. Therefore, fixing a chip in the paint or replacing a chipped tile is maintenance. Applying oil and rustproof where necessary, a spot of silicon or replacing a worn hinge is called maintenance or repairs. Imagine a maintenance man with a toolbox walking around the common property to keep the forces of nature at bay. That is maintenance. Repairs may include everything that breaks and that insurance does not fix.
Repainting the whole scheme, replacement of whole window sections or fixtures like security gates and fences with anything better than what it replaces is an improvement. The key question is will it be better afterwards? If so, it is an improvement.
Now, the steps are simple. Rule 33 applies and the trustees can start working. Define and motivate the need and desirability of the thing for which money is needed in the notice of the AGM. Get quotations and look for funding options. It may need a loan or a savings plan can be included in the budget. Present it to the members at the AGM for approval.
Luxurious improvements (the spa, pool, reflecting glazing, motorised gates and doors, electric fences and all those non-essentials) need a minimum 80% vote in number and participation quota (PQ).
Non-luxurious improvements (it is really necessary, but would still be better tha what precedes it) would need a minimum 75% vote in number and PQ.
The trustees may not raise special levies for anything not considered in a budget at an AGM. For emergencies, special general meetings may be called following the same procedure.
Trustees only meet and vote amongst themselves to do what was decided at a special AGM. The reason is to cover the individual against irregularities or abuse by Trustees. The body corporate may specify items allowed in the maintenance budget by unanimous vote and notify the registrar of the amendment of the rules.
The High Court may be approached for declaratory orders if rules are not clear. - Jack Nicolas (another sectional title boffin)
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