Heritage Estate – Sectional Title and The Body Corporate

Heritage Estate – Sectional Title and The Body Corporate

When signing an offer to purchase a sectional title unit at Heritage Estate – Mature Lifestyle Estate, buyers are agreeing to the conditions of buying into an investment project and becoming members of the Home Owners Association that in turn runs the Heritage Estate Body Corporate and the Olive Grove Body Corporate and all common areas.  The HOA is responsible for the financial management of the project being Heritage Estate.

The Body Corporate is the collective name given to the owners of the units and the common property within a sectional title project.  The Body Corporate comes into being when the developer transfers the first unit to its new owner. The developer calls a meeting within 60 days of the Body Corporate being formed – it is at this first meeting, according to the Prescribed Management Rules, that the developer will hand over the Sectional Plan and a Rates Certificate from Council. The Body Corporate will also receive the income and expenditure statements regarding the management of the Estate for the period from the first handover of a unit and the formation of the Body Corporate.

The function of the Home Owners Association is to manage and maintain Heritage Estate, and this covers the common property (driveways, common green spaces, swimming pool etc.) and exclusive use areas.  Security – guards, electric fencing, access control – as well as refuse removal, fibre etc will also be managed and budgeted for in the levy.  The HOA is bound by the MOI, the Sectional Titles Act and the Companies Act.  The Body Corporates is bound by the terms of the Sectional Titles Act, the Management Rules and the Conduct Rules of the scheme.  This means, that the Body Corporate is required to enforce rules in these documents.

Directors of the HOA – that represents all purchasers in the Estate, are elected annually at the AGM.  Trustees must be appointed to act for the Body Corporates – Heritage Estate and Olive Grove – that represents the owners.  Initially, the key role-players in a Sectional Title project are the developer, HOA, Directors, Body Corporate, trustees and management agents. The developer forms the company who has built the Estate and the company will cease to be a member of the HOA and Body Corporates once the company no longer has a share in the common property.

Directors’ duties include:

  • establishing a fund via levies paid by the owners for maintenance, management and administration of the common property and payment of taxes, water, electricity, security, insurance and other necessary services;
  • presenting a budget for the forthcoming year along with the required levy contribution to cover the budget.
  • opening a bank account for the 2 Body Corporates
  • insuring the common buildings of Heritage Estate;
  • maintaining the common property of the Estate,
  • informing the Community Schemes Ombud Service and local authorities of the official domicilium address of the Body Corporate
  • maintaining all the equipment and machinery forming part of the common property.
  • enforcing the Conduct Rules applicable to Heritage Estate to ensure the disciplines that have been established through the Conduct Rules allow all owners and their tenants to live in harmony with each other and the development as a whole.
 
Trustee duties include:
  • presenting a budget for the forthcoming year along with the required HOA levy and BC levy contribution to cover the budget
  • insuring the buildings of the Body Corporate
  • enforcing the conduct and management rules of the Body Corporate and HOA
  • overseeing the HOA directors in terms of financials and governance
 
 

Trafalgar Property Managers have been appointed as the Managing Agents of Heritage Estate, and have been appointed to look after the functions and administration of The Body Corporate – in terms of collecting levies and managing the maintenance and administration of the Estate. The trustees of the Body Corporate must authorize all expenditure and regular discussions regarding maintenance and repairs need to take place.   Annual General meetings are held to discuss issues relating to the Estate with Trustees and members of the Body Corporate, and special meetings can also be called.

When signing the purchase documents to buy into Heritage Estate, each owner agrees that they will contribute to the fund in the form of a levy, which is not optional. Buyers in a sectional title project are required by the Sectional Titles Act to pay levies. A levy is payable monthly and does not include the unit specific fees applicable to a Mature Lifestyle Estate and those billed by City Council for Rates & Taxes.

Some key changes have been implemented since October 2016 –The biggest change being the new community Schemes Ombud Service (CSOS) which will be used as a dispute resolution and to control sectional title governance.

The Body Corporate must also:

  • Establish a reserve fund. At this point the amount that is suggested will be required by each sectional title scheme to be set aside is 25% of the budgeted annual levy figure, i.e. if the levies are to be R100,000 for the year, then a reserve amount of R25,000 must be collected which puts the total for the year to be paid in by owners at R125,000. The aim of this fund is to cover costs of future maintenance and repairs to common property.
  • Notify the ombud of a domicile. The chief ombud, local municipality, and local registrar of deeds need to have the domicile registered so that in events of cases being brought against bodies corporate by owners or vice versa, there is one address by which to serve notices. This is also to simplify matters as all three bodies will have the same address registered.
  • Assist schemes to recover arrear levies. The regional ombud can be approached to help in cases where trustees are finding it difficult to recover arrear owner contributions.
  • Certify changes of levy contributions. When the levy amounts are to be changed (which is usually annually), this must be certified in writing.
  • Limit proxies. There will be a limit on the numbers of proxies held per person and a person will not be able to be proxy for more than two members.
  • Remedy an inability to obtain either a special or unanimous resolution. In future the chief ombud can be approached to assist in cases where there is a stalemate in achieving either a special or unanimous resolution.
  • Assist where there are differing management or conduct rules. In cases where the rules have been substituted, added to or changed, the chief ombud must approve these and a certificate will be issued to that effect.
  • Ensure the safe storage and delivery of management and conduct rules. All the rules must be made available at all meetings and given to people who are new to the scheme, whether owners or tenants.
  • Keep track of occupancy changes. The body corporate of sectional title schemes must be notified of details of any change of ownership.

Ref:

BBM Law – Marina Constas (Director), Sectional Title and Developments

Demystifying Sectional Title (Marina Constas and Karen Bleijs)

http://www.sectionaltitlecentre.co.za

http://www.csos.org.za/