Managing property in a sectional title scheme can be both rewarding and complex, requiring a clear understanding of legal and financial responsibilities. Effective property management ensures well-maintained common areas, security, and a thriving community, making it essential for trustees, managing agents, owners, and residents to work together in upholding the scheme’s regulations and financial stability.
In South Africa, the Sectional Titles Schemes Management Act (STSMA) 8 of 2011, which came into effect in 2016, governs the management and administration of sectional title schemes. The STSMA is essential for ensuring compliance, financial sustainability, and harmonious living.
Why Does the STSMA Matter?
South Africa has an estimated 1.9 million sectional title properties registered nationwide. As urbanisation increases and property developments expand, sectional title living has become an attractive option for homebuyers.
However, shared ownership raises questions about whose responsibility it is to pay for certain things, as well as how disputes are handled and what happens when an owner defaults on levies. The STSMA provides a structured legal framework to answer these questions, ensuring that all stakeholders operate fairly and transparently.
Key Components of the STSMA
The STSMA covers several crucial aspects of sectional title living, from governance structures to financial management. Some of the main areas it addresses include:
The Role and Responsibilities of the Body Corporate
The body corporate is the collective of all owners in a sectional title scheme. It is automatically formed once a developer sells the first unit in the scheme. This entity is responsible for the overall management of the scheme, which includes maintaining the common property, managing finances, and enforcing the scheme’s rules.
The body corporate oversees the upkeep of shared spaces such as gardens, corridors, and parking areas, ensuring they are well maintained for the benefit of all residents. It is also responsible for raising and managing levies to cover maintenance and operational expenses, ensuring the financial sustainability of the scheme. Additionally, the body corporate enforces compliance with conduct and management rules, helping to maintain a harmonious living environment. To facilitate decision-making and efficient governance, trustees are appointed to oversee the scheme’s daily operations and long-term planning.
The Role of the Trustees
Trustees are elected from among the unit owners to act in the best interests of the sectional title scheme. Their responsibilities include drafting and approving budgets to ensure the financial stability of the scheme, as well as overseeing proper maintenance and necessary repairs to keep the common property in good condition. They are also responsible for handling disputes among owners and ensuring that conflicts are resolved in a fair and efficient manner.
Additionally, trustees must keep records and financial statements up-to-date, providing transparency and accountability in the management of the scheme’s finances. A common misconception is that trustees have the authority to make unilateral decisions, but the Prescribed Management Rules (PMRs) require them to act with transparency and consult with body corporate members before making significant decisions.
Financial Management and Reserve Funds
One of the most significant provisions of the STSMA is the requirement for a reserve fund. Before this law, many schemes operated with minimal financial buffers, leading to high special levies when major repairs were needed.
Under the STSMA, schemes must now have two separate funds – the administrative fund for day-to-day expenses and the reserve fund for future maintenance and emergencies. The amount allocated to the reserve fund must be calculated based on a 10-year maintenance plan, and trustees must provide annual financial reports to owners, ensuring transparency.
Dispute Resolution and Enforcement of Rules
With shared spaces come disagreements about things like parking, noise, non-payment of levies, or alterations to units without approval. The STSMA allows the body corporate to enforce rules through warnings, penalties, or legal action if necessary.
The Community Schemes Ombud Service (CSOS) was established for unresolved disputes, and has the ability to enforce rulings. They provide a structured mediation and adjudication process as well as a cost-effective alternative to litigation.
Insurance and Maintenance Responsibilities
Many owners assume their personal homeowners’ insurance covers everything, but under the STSMA, the body corporate must insure the entire building structure. Owners are responsible for their own unit’s contents and any internal upgrades.
Maintenance responsibilities are divided into two with the body corporate responsible for maintaining and repairing the common property and the owners in charge of maintaining the inside of their units, including plumbing and electrical systems within their boundaries.
Common Challenges and How to Overcome Them
While the STSMA provides a clear legal framework, implementation can be challenging. Statistics show that levy arrears are a significant issue, with some schemes reporting non-payment rates as high as 30%.
Encouraging financial transparency builds trust and improves payment compliance. To address this, the STSMA prescribes that trustees must take proactive steps, such as issuing reminders and working with debt collection services, and legal action can be taken through CSOS if necessary.
Unexpected maintenance costs can be another financial burden. Having a well-managed reserve fund prevents sudden financial shocks. The STSMA encourages trustees to conduct regular inspections, develop a long-term maintenance plan, and communicate clearly with owners about expected costs.
Many owners buy into sectional title schemes without fully understanding their obligations. Solutions to overcome this include holding regular meetings and workshops to educate owners, providing welcome packs with essential STSMA information, and encouraging owner participation in body corporate decisions.
Understanding and complying with the Sectional Titles Schemes Management Act is vital for ensuring that a sectional title scheme is well-managed, financially stable, and a pleasant place to live. At FMS Property Managers, we specialise in helping sectional title schemes navigate the complexities of property management, ensuring compliance with the STSMA while promoting efficient and transparent governance.
If you need expert guidance, get in touch with us today. We’re here to help make sectional title living stress-free and rewarding.