Sectional Title - Changing the security calcuation

[Inevitability]

Hi guys,

In my sectional-title complex, security is being billed to owners per sqm of their unit, which is completely illogical to me since the service provided is unrelated to how large/small the unit is.
All services are bundled together as 1 line item in the levy statement, even though it comprises water, sewerage, security, garden services, insurance, and the standard levy.

My questions to anyone who has the expertise and can assist:
- Can the Body Corporate Trustees instruct the management agency to split the items on the levy statement with immediate effect, or does this need signed approval of all (or a majority) of owners?
- Can the Body Corporate Trustees instruct the management agency to alter the calculation of the security item so that each unit pays an equal amount (as opposed to paying per sqm of each unit), or does this need signed approval of all (or a majority) of owners?

Quite a mouthful there ... I could really use some expert advice (...managing agency isn't helping, and we're considering replacing them)

 

[Lupus]

Call an SGM, you as the body corporate (all owners) can sort things out as long as they follow the law. With the managing agent you look through ways of saving yourself and the whole complex money.

 

[Inevitability]

Call an SGM, you as the body corporate (all owners)

That was an idea put forward, but does the SGM need full attendance of all owners? Cos we only just got around 40% attendance for the AGM, and the rest didn't even bother to appoint proxies
For some reason, some of the owners don't seem to care to participate at all... very difficult to make positive changes.

as long as they follow the law

You make an important point here ... Managing agent made some dodgy comments about what the law compels us to do, and then ran and hid when the owners started to question the comments. That's why I posted here rather than asking them... Anyone have a link to the full range of law that applies to Body Corporates? I came across the Sectional Titles Act, but couldn't find anything specific to changing the calculation method of services.

 

[Kosmik]

Regarding the square meterage, this is a standard yardstick for BC's. It actually has to do with your Owner Quotient, which states how much of the respective scheme you own. Combined costs are normally split in this manner and the square meterage is what determines the quotient as filed in the deeds office.

Trustees can instruct the agency to do anything , however their instruction, especially around billing, needs to be backed by a resolution from the BC members. Check within your rules, what constitutes a quorum of your BC, that is the amount of people you need to pass resolutions but just be aware, some require 50% and others 69% ( of the members present ) to pass. Items like altering levies etc requires the higher majority.

You need to read the sectional titles act, heavy going but it explains in detail.

 

[Lupus]

That was an idea put forward, but does the SGM need full attendance of all owners? Cos we only just got around 40% attendance for the AGM, and the rest didn't even bother to appoint proxies
For some reason, some of the owners don't seem to care to participate at all... very difficult to make positive changes.

You make an important point here ... Managing agent made some dodgy comments about what the law compels us to do, and then ran and hid when the owners started to question the comments. That's why I posted here rather than asking them... Anyone have a link to the full range of law that applies to Body Corporates? I came across the Sectional Titles Act, but couldn't find anything specific to changing the calculation method of services.

We also only have about 30 to 40% attend our AGM's, the ones that don't are always the biggest moan when things need to get done. Do they know they can appoint a proxy? It's a 30 second thing to do, fill in a form and bam, also you need to have these meetings to make sure things are running smoothly and in cases like yours things are being done fairly. Call an SGM, if there is less than 40% keep insisting that if the owners cannot make it they need to appoint a proxy, this is for the good of their pockets too.

 

[Lupus]

Oh I found this

Quorum requirements
In terms of PMR 57 no business may be transacted at any general meeting unless a quorum of persons is present in person or by proxy at the time when the meeting proceeds to business. The number of persons present or represented differs depending on the number of units in the scheme:

if there are 10 units or less: 50% of the owners, present or represented, constitute a quorum;
if there are between 11 and 49 units: 35% of the owners, present or represented, constitute a quorum; and
if there are 50 or more units: 20% of the owners, present or represented, constitute a quorum.

So if you've got 40% of the owners and you've got more than 11 units, you've got a quorum and therefore don't require any of the other owners to lift a finger. If they do moan, tell them the meetings schedules were sent (has to be 14 days before), they didn't bother to respond.

 

[Kosmik]

Oh I found this

Quorum requirements
In terms of PMR 57 no business may be transacted at any general meeting unless a quorum of persons is present in person or by proxy at the time when the meeting proceeds to business. The number of persons present or represented differs depending on the number of units in the scheme:

if there are 10 units or less: 50% of the owners, present or represented, constitute a quorum;
if there are between 11 and 49 units: 35% of the owners, present or represented, constitute a quorum; and
if there are 50 or more units: 20% of the owners, present or represented, constitute a quorum.

So if you've got 40% of the owners and you've got more than 11 units, you've got a quorum and therefore don't require any of the other owners to lift a finger. If they do moan, tell them the meetings schedules were sent (has to be 14 days before), they didn't bother to respond.

Yep, sounds about right.

 

[saor]

Quite a mouthful there ... I could really use some expert advice (...managing agency isn't helping, and we're considering replacing them)

If you're always having problems with them - change. Best thing we ever did was ditch ours in favor of a company who was willing to work with us.

 

[Cius]

You can propose it at the next AGM. Thing is larger units will like the idea but smaller units won't. Also keep in mind larger units often have more people hence more heads benefitting from the service in question so it can be argued both ways. For instance we don't have individual water meters on units. If we did water the way you proposed a big 3 bed unit with a family of 4 pays equal water as a small unit with a single person. Right now we pay according to the PQ and that seems fairer.

We switched managing agents this year and they pointed out something we where doing that way (bins I think) and made the point each unit has one bin and the charge is per bin so she recommended we split the levy up into additional line items to make it more fair and charge each unit the same for garbage. Another benefit of this is that Council increases things like water and rates in July where we increase our levy around year end and that always throws the budget out. By having it as a separate line item on the levy statement its easier to pass on the council increase when it happens to the owners making complex financial management easier.

 

[Inevitability]

Regarding the square meterage, this is a standard yardstick for BC's. It actually has to do with your Owner Quotient, which states how much of the respective scheme you own. Combined costs are normally split in this manner and the square meterage is what determines the quotient as filed in the deeds office.

Fair enough, but security is an additional service and is provided equally to each unit irrespective of size. This is my contention... the Owner Quotient doesn't apply to services provided equally.

Trustees can instruct the agency to do anything , however their instruction, especially around billing, needs to be backed by a resolution from the BC members. Check within your rules, what constitutes a quorum of your BC, that is the amount of people you need to pass resolutions but just be aware, some require 50% and others 69% ( of the members present ) to pass. Items like altering levies etc requires the higher majority.

Useful info! Managing agent said the legislation requires 100% of owners to buy in. We called bulls**t but then she dodged further questions.

You need to read the sectional titles act, heavy going but it explains in detail.

Definitely!

Oh I found this
So if you've got 40% of the owners and you've got more than 11 units, you've got a quorum and therefore don't require any of the other owners to lift a finger. If they do moan, tell them the meetings schedules were sent (has to be 14 days before), they didn't bother to respond.

Super! ... Can I get a reference for your source cos I'm gonna use this in our next discussion with the managing agent

You can propose it at the next AGM. Thing is larger units will like the idea but smaller units won't.

Indeed! But right now, the larger units are protesting the logic of using sqm for a service that's provide to all equally, and I have to agree ... Full disclosure: I own a larger unit, but I would have supported the logic of equal payment even if I didn't. Also, next AGM is 11 months away

Also keep in mind larger units often have more people hence more heads benefitting from the service in question so it can be argued both ways. For instance we don't have individual water meters on units. If we did water the way you proposed a big 3 bed unit with a family of 4 pays equal water as a small unit with a single person. Right now we pay according to the PQ and that seems fairer.

This is a whole other conversation that I'm passionate about. We also don't have individual water meters. And sure, I can see the logic, but I have a counterpoint: I am especially water conscious cos of my upbringing, and there's crazy water wasters in my complex (watering gardens in the daytime and even through the drought), but I pay the higher amount cos my unit has more sqm . I'm gonna propose we get individual water meters cos the wasters need to feel the pain and wake up. But I know this is gonna be a real tough fight cos we'd have to spend money but we might not see any benefit (depending on individual use).

We switched managing agents this year and they pointed out something we where doing that way (bins I think) and made the point each unit has one bin and the charge is per bin so she recommended we split the levy up into additional line items to make it more fair and charge each unit the same for garbage. Another benefit of this is that Council increases things like water and rates in July where we increase our levy around year end and that always throws the budget out. By having it as a separate line item on the levy statement its easier to pass on the council increase when it happens to the owners making complex financial management easier.

Now there's the nail on the head!! Can I ask which managing agency you use?

So many helpful responses ... Thanks!

 

[Lupus]

http://www.paddocks.co.za/paddocks-press-newsletter/sectional-title-agms-for-dummies/

 

[Venomous]

Fair enough, but security is an additional service and is provided equally to each unit irrespective of size. This is my contention... the Owner Quotient doesn't apply to services provided equally.


Useful info! Managing agent said the legislation requires 100% of owners to buy in. We called bulls**t but then she dodged further questions.


Definitely!


Super! ... Can I get a reference for your source cos I'm gonna use this in our next discussion with the managing agent


Indeed! But right now, the larger units are protesting the logic of using sqm for a service that's provide to all equally, and I have to agree ... Full disclosure: I own a larger unit, but I would have supported the logic of equal payment even if I didn't. Also, next AGM is 11 months away


This is a whole other conversation that I'm passionate about. We also don't have individual water meters. And sure, I can see the logic, but I have a counterpoint: I am especially water conscious cos of my upbringing, and there's crazy water wasters in my complex (watering gardens in the daytime and even through the drought), but I pay the higher amount cos my unit has more sqm . I'm gonna propose we get individual water meters cos the wasters need to feel the pain and wake up. But I know this is gonna be a real tough fight cos we'd have to spend money but we might not see any benefit (depending on individual use).


Now there's the nail on the head!! Can I ask which managing agency you use?

So many helpful responses ... Thanks!

I was just thinking you need to swap managing agents...

I can recommend Angor.
www dot angor dot coza
(they run our complex levies)

And can advise of at least 3 others that are not good at handling bigger complexes, but they have many smaller complexes that sing their praises if you read up on them.

 

[Inevitability]

I can recommend Angor.

Angor is our problem! But maybe we can keep the agency, but swap the agent!

 

[yebocan]

We also only have about 30 to 40% attend our AGM's, the ones that don't are always the biggest moan when things need to get done. Do they know they can appoint a proxy? It's a 30 second thing to do, fill in a form and bam, also you need to have these meetings to make sure things are running smoothly and in cases like yours things are being done fairly. Call an SGM, if there is less than 40% keep insisting that if the owners cannot make it they need to appoint a proxy, this is for the good of their pockets too.

+1000 ..rattles me gears!

 

[^^vampire^^]

SQM should determine the percentage of the scheme you own and you pay levies based on that.

If your scheme costs R100k a month to run (water, elec, maintenance, wages, security etc etc) then budget should be roughly R110k a month (so you have a buffer for savings to avoid special levies later) which should come from levies. If your Participation Quota (PQ = your sqm / total sql of all units * 100) is 1% then you pay R1100 per month.

 

[Venomous]

Angor is our problem! But maybe we can keep the agency, but swap the agent!

Which area are you in?

 

[Venomous]

I've been thinking about it some more....

I seem to think that the portioning/allocations are done as instructed by the BC trustees.
Might not have been now. Might have been long ago, perhaps even with a previous managing agent.

So Angor might not be to blame as the cause, but surely you(trustees) should be able to sit them down. Then ask them to play ball and help solve the problem that was created at the beginnning of time. The trustees could even offer a few suggestions.

Water meters could prove a challenge if any communual water tapes are attached or VERY close to a home as the tap might source water from the same pipes as the home. IE the gardeners could use your bill to wash somethings on common property.

Our solution to that:
During a water restricted period no person is to water gardens or wash cars in the complex.
Any one found doing so will incur a R1000 fine for their unit immediately. This can be multiples per day. And if any inspectors arrive to see how water is used and someone is actively wasting water, whom ever is wasting, their unit will incur the WHOLE fine issued, billed to their unit.

In Jo'burg the water restriction have still not been lifted. We have a dry winter as we get summer rain.

 

[Cius]

We switched away from Angor this year to Boukorp property managers after Angor just kept getting worse and worse at their service levels. Been great so far. Not sure if Boukorp manages complexes they did not build but you can ask.

Edit: We also want to install individual water meters but the cost was prohibitive. Decided it was not worth it, but I do also wonder about the big water wasters.

 

[Kosmik]

I know in DUrban ( ethekwheni muni ) the cost of a seperate meter starts at R2.5k ( obviously additional work would be billed on a per unit basis as needed ) a meter. Also you can't do partial, the entire complex has to go seperate or not at all.

That was in 2011/2012 when I enquired though.

 

[Inevitability]

SQM should determine the percentage of the scheme you own and you pay levies based on that.
If your scheme costs R100k a month to run (water, elec, maintenance, wages, security etc etc) then budget should be roughly R110k a month (so you have a buffer for savings to avoid special levies later) which should come from levies. If your Participation Quota (PQ = your sqm / total sql of all units * 100) is 1% then you pay R1100 per month.

...and this is exactly the logic I am fighting against.
I get why this sounds right at first glance, but glaring examples like the ones mentioned above (i.e. bins, security, and individual water usage) make it very obvious that the PQ system can't be "blanket-applied" (for lack of a better word) to the entire bill of the complex. Cos then we should just apply it to electricity as well. Don't get me wrong... I definitely support the PQ system for the general levy (i.e. all common property bills), but services that are provided equally must be billed equally, and usage-varying services (individual water consumption , electricity) must be billed accordingly. Any other way means some of us are being carried, and some of us are getting shafted.

Which area are you in?

Buccleuch

I've been thinking about it some more....
I seem to think that the portioning/allocations are done as instructed by the BC trustees.
Might not have been now. Might have been long ago, perhaps even with a previous managing agent.
So Angor might not be to blame as the cause, but surely you(trustees) should be able to sit them down. Then ask them to play ball and help solve the problem that was created at the beginning of time. The trustees could even offer a few suggestions.

And this is exactly the approach we tried. Managing agent threw the book at us saying we can't modify levy calculations unless we get 100% signed approval from all units. Since all services are bundled into 1 line item, we suggested splitting the line items in order to separate the levy from the additional services and she said it's do-able, but it wouldn't affect the restriction on changing the calculation method. This is where we started to question her willingness to work with us cos I've got buddies elsewhere that have done this same thing, and even Cius above posted the same. This is the reason I posted here to see who else has been successful in splitting the items and changing the calculation method of the line items.

Water meters could prove a challenge if any communal water taps are attached or VERY close to a home as the tap might source water from the same pipes as the home. IE the gardeners could use your bill to wash somethings on common property.
Our solution to that:
During a water restricted period no person is to water gardens or wash cars in the complex.
Any one found doing so will incur a R1000 fine for their unit immediately. This can be multiples per day. And if any inspectors arrive to see how water is used and someone is actively wasting water, whom ever is wasting, their unit will incur the WHOLE fine issued, billed to their unit.
In Jo'burg the water restriction have still not been lifted. We have a dry winter as we get summer rain.

Water usage is gonna be the toughest fight. Your idea would definitely be a step in the right direction. But without proper metering, people could still be consuming a lot of water privately (multiple baths per day for the kids instead of showers , leaving taps running unattended , ignoring leaks , etc). And we're all having to foot the bill for what could be a few owners' apathy. I;m very aware that installing individual meters will be the hardest sell, so I'm not making too much of a noise about it right now, but it really kills me to know there's people who don't give a s**t about saving water while 10% of the world's population don't even have access to clean water at all.
And I want those f***ers to pay!