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June 20 2024 18:00

This is a guest article by Savannah Solomons of Solomons Attorneys and Solomons Legal Consulting. She has worked with a range of companies including start-ups, large groups and multinationals. In this piece she discusses how to navigate disputes in sectional title schemes.

Sectional title and body corporate disputes are common issues within the South African property law framework. These disputes can arise from various aspects of the management and ownership of sectional title schemes, which are essentially properties where different parts of the property are owned by different people, but the entire property is managed collectively.

This is why it is important to understand how a Sectional Title Scheme is structured, what roles and responsibilities are attached to different role players and how disputes can be dealt with. Understanding this structure can better help you understand where there may be underlying issues in a potential investment, or understand how to deal with issues should a dispute arise for owners in a scheme.

1. What are Sectional Title Schemes and Body Corporates

A Sectional Title Scheme is a scheme wherein owners individually own sections of a building, group of buildings, or property. A section refers to the space between the four walls, ceiling, doors, windows, and floor. An example would be townhouse units in a complex or an apartment in a block of flats.

A sectional title owner owns a unit in the Sectional Title Scheme, which is either a townhouse unit or an apartment. In addition the owner will have a right to an undivided share in a percentage of the common property areas, including parking.

Common property includes areas everyone may use like gardens, stairways, corridors, lifts. Exclusive use areas refer to areas exclusive to a particular owner, such as private gardens and parking areas.

A body corporate is a legal entity made up of all the owners in the Sectional Title Scheme. The body corporate exists to represent the owners and manage and control the building or complex by making sure that its financial, administrative, and physical needs are taken care of.

2. Common Types of Disputes

  • Financial Disputes: Issues related to levy payments, special levies, budgeting, and financial management;
  • Maintenance and Repairs: Disputes over responsibility for maintenance and repairs of common property versus individual units;
  • Rule Enforcement: Conflicts arising from the enforcement of body corporate rules and regulations;
  • Noise and Nuisance Complaints: Disputes due to noise, pets, and other nuisances affecting unit owners.

3. Legal Framework and Dispute Resolution

Sectional Title Schemes in South Africa find their legal foundation in the Sectional Titles Schemes Management Act (STSMA) and the Community Schemes Ombud Service Act (CSOSA). These two crucial legislative frameworks create a comprehensive roadmap for the resolution of disputes within Sectional Title Schemes.

Dispute Resolution Mechanisms:

Internal Dispute Resolution

If a Sectional Title Scheme is properly managed, minor disputes will be managed by the scheme’s executive committee and the managing agent. These individuals will work to resolve disputes by mediation or negotiation and will promote dialogue and compromise. This system often ensures that mutually acceptable solutions are reached and that further legal action is not necessary.

Community Schemes Ombud Service (CSOS)

Where internal resolution is not possible, the Community Schemes Ombud Service (CSOS) can be approached as the designated dispute resolution body for Community Schemes.

Once approached the CSOS will facilitate mediation and ensure issues are dealt with impartially and equitably.

Legal Recourse

If no resolution can be attained by means of the above methods parties may approach court to ensure Judgment is handed down in their disputes. Legal recourse is a last resort considering the cost and time implications can be severe. This is why it is important to mediate or approach the CSOS before taking steps further in court.

4. Roles and Responsibilities

In a Sectional Title Scheme, managing agents, trustees, and owners play crucial roles in ensuring the effective management and smooth operation of the property. Here are the detailed roles and responsibilities of both:

Trustees

Roles:

  •   Governance: Trustees are essentially the board of directors for the body corporate, responsible for overseeing the management of the Sectional Title Scheme.
  •   Decision-Making: They make key decisions regarding the maintenance, financial management, and overall governance of the scheme.
  •   Representation: Trustees represent the interests of all the owners in the scheme.

Responsibilities:

  1.   Financial Management:
    1. Budgeting: Preparing and approving the annual budget.Levy Collection: Ensuring timely collection of levies from unit owners.Expense Management: Authorising payments for maintenance, repairs, and other expenses.
    1. Financial Reporting: Providing transparent financial reports to the owners.
  2.   Maintenance and Repairs:
    1. Upkeep: Overseeing the maintenance of common property areas.
    1. Repairs: Ensuring that necessary repairs are carried out promptly and efficiently.
  3.   Compliance and Legal Responsibilities:
    1. Legal Compliance: Ensuring the scheme complies with relevant laws, including the Sectional Titles Act and Sectional Titles Schemes Management Act.
    1. Dispute Resolution: Addressing and resolving disputes within the scheme.
    1. Insurance: Ensuring adequate insurance coverage for the property.
  4.   Communication:
    1. Meetings: Organizing and conducting Annual General Meetings (AGMs) and Special General Meetings (SGMs).
    1. Transparency: Keeping unit owners informed about important decisions and changes.
  5.   Rule Enforcement:
    1. By-Laws: Enforcing the scheme’s by-laws and rules.
    1. Disciplinary Actions: Taking necessary action against breaches of the rules.

Managing Agents

Roles:

  1. Administration: Managing agents handle the day-to-day administrative tasks of the Sectional Title Scheme.
  2. Support to Trustees: They provide professional support and advice to the trustees.

Responsibilities:

  1. Administrative Management;
  2. Financial Management;
  3. Maintenance Coordination;
  4. Compliance Assistance;
  5. Advisory Role;
  6. Conflict Resolution.

Collaboration Between Trustees and Managing Agents

Trustees and managing agents must work closely together to ensure the effective management of the Sectional Title Scheme. Both parties need to clearly define their roles and maintain open lines of communication to avoid misunderstandings and ensure that the scheme operates smoothly. Regular meetings between trustees and managing agents can help address issues promptly and keep the scheme running efficiently.

By understanding and fulfilling these roles and responsibilities, trustees and managing agents can ensure that the Sectional Title Scheme is well-managed, financially sound, and a pleasant place for all owners and residents.

Rights of Unit Owners

  1.   Ownership Rights:
    1. Exclusive Use: The right to exclusive use and enjoyment of their individual unit.
    1. Common Property: The right to use and enjoy common property areas (such as gardens, pools, and recreational areas) in accordance with the body corporate rules.
  2.   Participation in Governance:
    1. Voting Rights: The right to vote at general meetings, including the Annual General Meeting (AGM) and Special General Meetings (SGMs).
    1. Election of Trustees: The right to nominate and elect trustees to represent the interests of the unit owners.
  3.   Information Access:
    1. Financial Statements: The right to access financial statements and other relevant documents of the body corporate.
    1. Meeting Minutes: The right to inspect minutes of meetings and resolutions passed by the trustees or the body corporate.
  4.   Fair Treatment:
    1. Non-Discrimination: The right to be treated fairly and without discrimination in the administration of the scheme.
    1. Equal Access: Equal access to common facilities and services provided by the body corporate.
  5.   Dispute Resolution:
    1. Complaints: The right to lodge complaints and disputes with the body corporate.
    1. Mediation and Arbitration: Access to dispute resolution mechanisms, including mediation and arbitration, as well as the Community Schemes Ombud Service (CSOS) for unresolved issues.

Obligations of Unit Owners

  1.   Financial Contributions:
    1. Levy Payments: The obligation to pay levies and special levies as determined by the body corporate for the maintenance and management of the scheme.
    1. Utility Payments: Payment of utility charges (electricity, water, etc.) as applicable to their unit.
  2.   Maintenance Responsibilities:
    1. Unit Maintenance: The obligation to maintain their individual unit in good condition.
    1. Common Property: To not damage common property and to report any issues to the body corporate promptly.
  3.   Compliance with Rules:
    1. Scheme Rules: The obligation to comply with the rules and regulations set by the body corporate, including conduct rules, management rules, and use of common property.
    1. Changes to Units: To obtain necessary permissions before making structural changes to their unit that may affect common property or other units.
  4.   Respect for Others:
    1. Noise and Nuisance: The obligation to not create noise or other nuisances that disturb other unit owners.
    1. Pets: Complying with any rules regarding pet ownership and ensuring pets do not cause disturbances.
  5.   Participation in Governance:
    1. Meeting Attendance: The obligation to attend general meetings to stay informed and participate in decision-making.
    1. Voting: To exercise voting rights responsibly and in the best interests of the scheme.
  6.   Reporting and Cooperation:
    1. Incident Reporting: Reporting any issues or breaches of rules to the trustees or managing agent.
    1. Cooperation with Trustees: Cooperating with trustees and the managing agent in the management and administration of the scheme.

Understanding these rights and obligations helps unit owners navigate their responsibilities and privileges within a Sectional Title Scheme. It promotes harmonious living, ensures proper maintenance and management of the property, and protects the interests of all involved parties. By adhering to these principles, unit owners contribute to the overall success and sustainability of the Sectional Title Scheme.

5. Conflict resolution tips for trustees in Sectional Title Schemes

Understand the nature of the conflict as a starting point

It is vital to understand a dispute as well as the source of the problem in order to resolve the dispute. Knowing the root causes is crucial before moving on to develop a strategy for resolution.

Dispute resolution strategies

When resolving disputes, it is important for trustees to be fair, impartial, and transparent. They should also be respectful of the parties involved and willing to compromise.

The following tactics aim to assist to resolve disputes amicably:

1. Open and respectful communication;

2. Review the governing documents;

3. Seek legal advice when necessary;

4. Utilise mediation;

5. Establish a dispute resolution committee.

Ultimately, the goal of dispute resolution is to reach an agreement that satisfies all parties involved. Here are some steps to achieve this goal:

1. Identify common interests;

2. Explore compromises;

3. Document agreements;

4. Monitor and follow-up;

6. Conclusion

Conflict is a reality in Sectional Title Schemes and, because of the complicated nature and structure of these schemes, it can be difficult to manage.

Understanding the legal structure of these schemes is vital for investors who wish to purchase in Sectional Title Schemes, not only because this will ensure you understand how to implement your own roles and responsibilities once you have purchased, but also because it is important to analyse the structure and management of the Sectional Title Scheme before purchasing to understand the implications of your investment. It is always advisable to ensure Sectional Title Schemes are assisted by experts who understand the legal implications of owning and managing a Sectional Title Scheme. For the homeowner, it is always advisable to seek legal advise and information before purchasing in a Sectional Title Scheme to ensure that you are able to protect your rights.

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