Community Schemes Ombudsman Services Act & Sectional Title Schemes Management Acts and Regulations
We write to inform you that the aforementioned legislation has come into effect from the 7 October 2016.
To summarize, there are four pieces of new legislation which have varying degrees of relevance depending on which juristic entity residential complex you own and reside in:
1 Community Schemes Ombud Service Act, 2011;
2 Regulations on Community Schemes Ombud Service Act;
3 Sectional Titles Schemes Management Act, 2011;
4 Sectional Titles Schemes Management Regulations;
Items 1 & 2 above affect residential owners in any and all Schemes as defined [sectional title body corporate, home owners’ association (NPC or by voluntary association), share block company or retirement village] while items 3&4 above affect only sectional title
bodies corporate (this in addition to items 1 & 2); the purpose of the Acts being to provide an affordable and efficient dispute resolution service (the CSOS Ombud) which we view as a potentially positive development.
Whilst there is a lead in period for the registration and submission of all governance documentation for property Schemes, same being 30 and 90 days respectively, we are currently attending to the registration and lodgment of required documentation with the
CSOS Ombud, where the necessary authority resolutions from Trustees will be a requirement.
All Schemes
• Submission of specified governance documentation.
• The payment of a monthly CSOS levy commencing 1 January 2017 in an amount equal to 2% of the monthly levy (first R500 exempt to a maximum of R40 per unit); will be charged and will therefore appear as a new line item on your monthly
levy statement in line with this timing
• New requirement for the Scheme to have fidelity cover subject to the provisions of Regulation 15 of the CSOS Act is additional to the above
Sectional Title Bodies Corporate – In addition to the above:
• Sectional title Schemes must budget for both an administrative fund, this akin to the budgets currently done by Schemes without a maintenance contingency, and also a reserve fund which takes a 10 year maintenance plan of the Scheme into
account as explained further below. The quantum, formulae and contributions towards achieving a minimum reserve fund are defined in The Act and Regulations. The formation of a 10 (ten) year maintenance plan which must be tabled for
approval at each Annual General Meeting and which is a determining factor in the calculation of the reserve fund of the Scheme
• There is a change in quorum requirements and limitation of proxies which will necessitate a second meeting in many larger schemes.
• Schemes must tend to a professional insurance replacement valuation once every three years and also (as a result) restrict the a
• There is a restriction of items which are capable of being loaded onto the levy account(s) of owner(s)
• Amendments and variations to Rules need to be lodge and approved by the Ombud
Whilst the above summary is not intended to be definitive, it does highlight some the major implications of the aforementioned legislative changes. There are, as is typically the case with new legislation, a number of uncertainties and ambiguities both within the said legislation and with alternate, existing and applicable, legislation, which we are currently working directly with the CSOS, to clarify.
