Question 1
May a body corporate discriminate against owners who rent out their property by charging them a higher levy than everybody else? The levy is normally paid by the owner. Who lives in the property makes no difference. The levy only pays for the cutting of the grass, the gate, common road and outer wall. The owners pay for the maintenance and water themselves. - Dewald de Lange
Answer 1
Unless other special rules have been validly adopted in terms of section 32(4) of the Sectional Titles Act of 1986 ("the Act"), section 32(3)(c) provides that the participation quota of an owner's section shall determine the amount of levies an owner pays. An owner's participation quota is a fraction worked out by dividing his floor area as shown on the sectional plan by the total of all the floor areas of sections in the scheme. For example, if owner A's section has a floor area of 50 square meters and the sum of all the sections floor areas is 1000 square meters, then owner A's PQ will be 0,0500 or 5% because 50 1000 = 0,05.
Therefore the answer to your question is that a body corporate must charge levies based on each owner's participation quota and may not discriminate against investor-owners by making them pay arbitrarily calculated higher levies than resident-owners UNLESS the developer or body corporate has validly adopted a rule catering for such a situation in terms of section 32(4). If the developer made such a rule changing the effects of the participation quota in terms of section 32(4) he would have to disclose this rule in each purchaser's deed of sale. If the body corporate made such a rule, section 32(4) requires the authorization of a special resolution and the written consent of any owners who are adversely affected. And even if the developer or body corporate tried to make such a rule, it would have to pass the "is it reasonable?" test. The Act requires that every rule be reasonable and that it apply equally to all units put to the same purpose.
Question 2
I would like to refer to the article written by Jennifer and published on Property24.com 05 August 2008 specifically with regards to the following;
"As a buyer, you may also benefit from exclusive use rights allocated to your section which allow you to use a portion of the common property to the exclusion of all other owners, for example a parking bay. Exclusive use rights may be allocated to a section by either being formally registered on the sectional plans of the scheme (in terms of section 27 of the Sectional Titles Act 95 of 1986 "the Act") or more informally by passing a rule which gives the owner of a section the right to use such an area (in terms of section 27A of the Act). If you have been allocated exclusive use rights in terms of section 27 or section 27A it is important to understand that although you have the right to use an area of the common property exclusively, that does not mean that you exclusively own that area. It remains part of the common property and is therefore still owned by all the owners of sections, however no other owner has the right to use it besides you".
I have got a particular interest in this matter and would like to confirm whether it should be the CONDUCT rules or MANAGEMENT rules that are to be amended to allow exclusive use of a particular area. By what means (voting) should such an amendment be approved by the Body Corporate? - Arrie Jansen van Vuuren
Answer 2
Section 27A of the Act states that 'a developer or a body corporate may make rules which confer rights of exclusive use..' and does not qualify the word 'rules' with the word 'management' or 'conduct' and similarly does not say 'rules made by unanimous resolution' or 'rules made by special resolution'.
Due to this lack of reference to a specific type of rule, rules conferring exclusive use rights can be either management or conduct rules. If the legislature intended the rules to be of a specified type it would have specifically said so as it does elsewhere in the Act.
Question 3
I am a trustee of a body corporate and I really need some clarity or advice. I would like to know if it's 'legal' for a trustee or chairman to use his own personal business for the complex, ie doing repairs and maintenance work in the complex and using his own personal company to do the work and be paid for it?
Is this allowed? The reason for my concern, is that, it was quite huge amounts that were paid out to his company.....+/- R100 000. - Ms AN Daniels
Answer 3
Prescribed management rule ("PMR") 23 provides that:
"A trustee shall be disqualified from voting in respect of any contract or proposed contract…with the body corporate by virtue of any interest he may have therein."
Therefore a trustee or chairman is disqualified from voting when the trustees make a decision as to which contractor they want to use to do work for the body corporate if the trustee or chairman has an interest in, or stands to make a profit from, the appointment of a proposed contractor.
That being said, if the trustees resolve to use the chairman's personal company despite the chairman's disqualification from voting, there is nothing stopping the chairman's personal company from entering into a contract with the body corporate.
Question 4
I read your interesting article on Property24 with regards to Sectional Titles.
I would like to know, what re-course can one take against a neighbour who goes out of her way to make your life hell, despite the fact that you're not breaking any rules.
One day she complains that I closed my garage door when she was coming to talk to me, so it means I'm hiding something (like an animal to slaughter) in the garage.
The next day she'll complain that she saw a lady in my garden, and wants to know who it was.
I make sure that I stay well within the complex rules, but she goes out of her way to provoke me. There are 5 houses in the complex. She doesn't work so has the time and energy to be spying on other peoples' properties. - Vimbai Carole Muzofa
Answer 4
Unfortunately personal vendettas are not covered in the Act or the prescribed rules. Living in a sectional title scheme often means being in close proximity to your neighbours and if you have a bad relationship with any of them it can make your home and surrounding areas uncomfortable.
In community living situations, people tend to support those with whom they have healthy relationships. It sounds like you need to approach your neighbour in a non-aggressive manner and try to resolve whatever personal issues she has with you and try to find some common interests.
Question 5
I am a trustee of a body corporate. The Chairperson has requested that the Managing Agent supply us with bank statements as money on the audited statements was not included in the managing agent's budget. The Managing Agent refuses to give the statements to us. Are we entitled to them or not? - Shirley Butler
Answer 5
The managing agent works for the trustees and, on their behalf, may exercise the functions and perform the duties of the body corporate. A managing agent is not entitled to withhold any pertinent information, such as bank statements relating to the body corporate's funds. First make sure that the instruction is given in writing. If your managing agent continues to refuse to give the trustees access to the body corporate's banking information, you should terminate his/her contract, again in writing. You would have to analyse the contract and should obtain legal advice, but the behaviour you describe seems to warrant termination after formal notice has been given.
Question 6
Is there a time frame from the registration of a new development until a Board of Trustees must be elected?
I have bought 2 vacant plots in a new walled development. The properties were transferred into my name in November 2007 but thus far no meetings have been held to elect trustees. As a result the developer is still acting as the board of trustees. I now want to sell the 2 properties but he is blocking the sale since he has a personal feud with the estate agent I used.
Can he do that? What legal action can I bring against him? - Johan Burger
Answer 6
In terms of section 36(1) of the Act a sectional title body corporate is established on the date which any person other than the developer becomes an owner of a unit in the scheme. The developer and that owner are the body corporate's members and every person who thereafter becomes an owner of a unit in that scheme shall become a member of the body corporate.
The fact that you are an owner in the scheme means that a body corporate has been established.
In terms of section 36(7)(a) a developer shall convene a meeting of the members of the body corporate not later than 60 days after its establishment. If the developer fails to do this, section 36(7)(b) provides that he may be guilty of an offence and liable on conviction to a fine or imprisonment not exceeding two years.
Your developer seems not to have complied with section 36(7)(a) and therefore the provisions of section 36(7)(b) may be applicable to him.
In terms of PMR 4(2), with effect from the date of the establishment of the body corporate, all owners shall be trustees who shall hold office until the first general meeting of the body corporate.
Therefore until the first meeting is held, the developer, you and every other owner are currently the trustees of the scheme. Unless there is a provision in your sale agreement or in the amended scheme rules, the developer has no authority to block the sale of your two units.
I suggest you seek formal legal advice from an attorney if the developer's unauthorized behaviour persists.
Question 7
I live in a sectional title complex that has been approached by a company to buy the whole building offering an amount per square meter.
My question is what if some of us do not wish to sell? What will the outcome be? - Max
Answer 7
In effect, for a company to buy the whole building the scheme will have to be terminated. The Act provides two methods for the termination of a scheme. One is through alienating all the common property in terms of section 17(1) – which would require a unanimous resolution of the body corporate. The other is through the actual or deemed destruction of the building/s in terms of sections 48 and 49. The second method requires a unanimous resolution of the body corporate or alternatively an application to court which will only be successful if the applicant can prove that the deemed destruction is just and equitable having regard to all the circumstances.
Therefore if the body corporate wants to use either method to terminate the scheme it will have to get a unanimous resolution which requires the following:
• 30 days notice of a general meeting
• An annexure to the notice setting out the proposed unanimous resolution
• An 80% quorum at the general meeting
• Every person entitled to vote at the meeting must vote in favour of the resolution (an abstention is counted as a vote in favour)
• If anyone votes against the resolution it is defeated
You and the other owners who do not wish to sell may simply object to the resolution and your objections will defeat the resolution necessary to authorize the sale of the scheme's building. It is possible for the body corporate to make application to court in terms of sections 48 and 49 but this would be expensive and the chances of success are not guaranteed.
Question 8
If there are hairline cracks on the outer skin (common property) of my external wall and rain infiltrates and causes damp on the inside (which I own and am financially responsible for), who incurs the costs to have it fixed and made good, inside & out? - Dave Jonker
Answer 8
It is the body corporate's responsibility to repair and maintain the common property and an owner's responsibility to repair and maintain his section. If an owner's section is damaged as a result of the body corporate's failure to repair and maintain the common property, the owner is responsible to have his section fixed but may claim the reasonable costs of the repair from the body corporate and demand that the body corporate remedy the cause of the damage so as to prevent his section from being damaged again in the future.
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