New legislation on amending rules?
The new Sectional Title Schemes Management Act contains the prescribed conduct rules (Annexure A) and management rules (Annexure B) which provide for the regulation, management, administration, use and enjoyment of sections and common property.
Similar to section 35 of the Sectional Titles Act, section 10(2) of the Sectional Title Schemes Management Act states that the management and/or conduct rules may be substituted, added to, amended or repealed by the developer when submitting an application for the opening of a sectional title register. Thereafter, the management rules may be substituted, added to, amended or repealed, by the extent provided by regulation, by unanimous resolution of the body corporate. Similarly, the conduct rules may be substituted, added to, amended, or repealed by special resolution of the body corporate provided the conduct rules may not be irreconcilable with the prescribed management rules.
While the above is in line with the Sectional Titles Act, section 10(5) of the Sectional Title Schemes Management Act makes provision for a new procedure to be followed when changing the rules, which includes lodging a notification in the prescribed form of the substitution, addition, amendment or repeal with the chief ombud. The chief ombud will then examine any proposed change and must not approve it for filing unless he/she is satisfied that the change is reasonable and appropriate to the scheme. If the chief ombud approved the substitution, addition, amendment or repeal of the rules for filing, he/she will issue a certificate to that effect on which date the revised rule(s) come into operation.
Up until recently, amended or substituted sectional title rules filed in the deeds office were never examined and did not require approval. However many body corporates realised later down the line when trying to enforce certain rules that they are in fact unenforceable. It would appear that scrutinizing the reasonableness and appropriateness of rules is a logical step towards ensuring fair rules which can be effectively enforced when necessary.
While in theory the examination and approval of rules should result in a positive outcome, we cannot help but wonder how this will work in practice. What qualifications and experience do the examiners have and are they equipped to make such rulings? What will they consider to be reasonable and appropriate? How long will it take for rules to be scrutinized?
Considering the rules will now be scrutinized, body corporates and developers should avoid overly restrictive conditions that unreasonably prohibit an owner’s right to use his/her section(s). Owners can now approach the ombud for relief if they feel that a rule is unreasonable. In terms of Section 39(3)(d) of the Community Schemes Ombud Service Act, an application for relief may include an order declaring that a scheme governance provision, having regard to the interests of all owners and occupiers in the community scheme, is unreasonable, and requiring the association to approve and record a new scheme governance provision.
It has been suggested that rules which arbitrarily provide for overly restrictive conditions, if challenged, are likely to be amended by the chief ombud if he/she feels that a specific rule is unreasonable or inappropriate in the circumstances. We are particularly interested to see how the Chief Ombud will approach contentious rules such as blanket restrictions on pets and short-term letting.