Com­mu­nity schemes fi­nally have a chan­nel for com­plaints

Res­i­dents of com­mu­nity prop­erty schemes plagued by bad man­age­ment or anti-so­cial el­e­ments can now look to a new statu­tory dis­pute-res­o­lu­tion ser­vice for re­lief. re­ports

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Res­i­dents of com­mu­nally owned prop­er­ties, in­clud­ing sectional ti­tle schemes and home­own­ers’ as­so­ci­a­tions, can now com­plain to a statu­tory dis­pute- res­o­lu­tion ser­vice if they be­lieve their com­plexes are be­ing mis­man­aged or if they have a dis­pute with an­other res­i­dent.

The long-awaited Com­mu­nity Schemes Ombud Ser­vice (CSOS) of­fi­cially opened its doors yes­ter­day, when the fi­nal reg­u­la­tions gov­ern­ing its man­date and func­tions were pub­lished in the Govern­ment Gazette. Pres­i­dent Ja­cob Zuma as­sented to the CSOS Act in June 2011, but it was four years later that the Min­is­ter of Hu­man Set­tle­ments re­leased a draft ver­sion of the reg­u­la­tions for public com­ment in Oc­to­ber 2015.

The new Sectional Ti­tles Schemes Man­age­ment Act, which re­places parts of the Sectional Ti­tles Act, also came into force on Fri­day (see

It is hoped the CSOS will re­sult in a ma­jor shake-up of com­mu­nity schemes, par­tic­u­larly sectional ti­tle schemes, be­cause many own­ers, ten­ants, trustees and bod­ies cor­po­rate thumb their noses at their statu­tory and com­mon-law obli­ga­tions and ig­nore schemes’ in­ter­nal gov­er­nance rules.

The com­mon prob­lems that be­set schemes in­clude:

• Poor man­age­ment of scheme fi­nances – in par­tic­u­lar, not hav­ing fidelity cover to pro­tect own­ers in the event of fraud or theft com­mit­ted by scheme ex­ec­u­tives or a manag­ing agent (see “Schemes must have fidelity cover”);

• Trustees mak­ing or amend­ing the scheme’s rules with­out seek­ing a res­o­lu­tion from the body cor­po­rate;

• Dis­putes be­tween own­ers and their body cor­po­rate over who is li­able for main­te­nance and re­pairs;

• Trustees or own­ers mak­ing al­ter­ations to the com­mon prop­erty with­out au­tho­ri­sa­tion;

• Own­ers ex­tend­ing their dwellings and in­cor­po­rat­ing parts of the com­mon prop­erty with­out per­mis­sion; and

• Trustees be­ing un­able to stop anti- so­cial be­hav­iour, such as res­i­dents be­ing dis­turbed by latenight par­ties and pets foul­ing the com­mon prop­erty.

Un­til now, if a dis­pute could not be set­tled in­ter­nally, there were two ex­pen­sive al­ter­na­tives: pri­vate ar­bi­tra­tion or en­gag­ing an at­tor­ney and tak­ing the mat­ter to a mag­is­trate’s court or the High Court. The cost, time and ef­fort in­volved de­terred many bod­ies cor­po­rate or own­ers from press­ing their case. Ag­grieved own­ers suf­fered in si­lence or sold and moved out.

The ju­ris­dic­tion of the CSOS is not lim­ited to sectional ti­tle schemes; it in­cludes share-block com­pa­nies, home­own­ers’ or prop­erty- own­ers’ as­so­ci­a­tions, hous­ing schemes es­tab­lished in terms of the Hous­ing De­vel­op­ments for Re­tired Per­sons Act and hous­ing co-op­er­a­tives es­tab­lished un­der the South African Co-op­er­a­tives Act.

If the CSOS ac­cepts a com­plaint, it will be set­tled by con­cil­i­a­tion or ar­bi­tra­tion. An or­der is­sued by a CSOS ad­ju­di­ca­tor has the same au­thor­ity as a judg­ment of a mag­is­trate’s court or High Court, de­pend­ing on the type of re­lief sought.

The ombud ser­vice comes at a price: all com­mu­nity schemes will have to pay a CSOS levy to the ser­vice each quar­ter. A scheme’s levy is cal­cu­lated as two per­cent of the amount by which the levy of each unit in the scheme ex­ceeds R500 a month. In other words, no levy is due by units that pay a com­mu­nity scheme a monthly levy of R500 or less. The levy is capped at R40 a month (or R480 a year), which kicks in once the monthly levy paid to the scheme is R2 500 or more.

As an ex­am­ple, if you, as a sectional ti­tle owner, pay a body cor­po­rate levy of R900 a month, your CSOS levy will be two per­cent of R400, which is R8 a month (R96 a year). If your body cor­po­rate levy is R1 750 a month, your CSOS levy will be R25 a month (R300 a year).

The draft reg­u­la­tions re­leased last year pro­posed that the CSOS levy be based on a unit’s mu­nic­i­pal val­u­a­tion, but this was changed in the fi­nal reg­u­la­tions.

Own­ers whose monthly levy ex­ceeds the R500 thresh­old can ap­ply to have their CSOS levy dis­counted or waived. They will have to com­plete a pre­scribed form on which they must de­tail their in­come, as­sets, ex­pen­di­ture and li­a­bil­i­ties.

Themba Mthethwa, the Chief Ombud, told Per­sonal Fi­nance that com­mu­nity schemes will have 90 days from the date on which the reg­u­la­tions were pub­lished ( Oc­to­ber 7) to get their levy­col­lec­tion sys­tems in or­der – in other words, schemes will not have to col­lect levies dur­ing the 90-day grace pe­riod.

The ombud ser­vice will not only pro­vide a dis­pute-res­o­lu­tion ser­vice; it will be re­spon­si­ble for stor­ing and mon­i­tor­ing com­mu­nity schemes’ gov­er­nance doc­u­men­ta­tion, such as man­age­ment and con­duct rules, con­sti­tu­tions and mem­o­randa of in­cor­po­ra­tion.

Un­til now, the gov­er­nance doc­u­men­ta­tion of sectional ti­tle schemes had to be filed at a Deeds Of­fice. If a body cor­po­rate amended its man­age­ment or con­duct rules, the amend­ments had to be filed at the Deeds Of­fice in or­der for them to take ef­fect. How­ever, the Regis­trar of Deeds was not re­quired to en­sure that the rules com­plied with the Sectional Ti­tles Act or the pre­scribed man­age­ment rules.

Now, all com­mu­nity schemes will have to file their gov­er­nance doc­u­men­ta­tion with the CSOS, which will check that they con­form to the rel­e­vant leg­is­la­tion.

All com­mu­nity schemes must reg­is­ter with the CSOS and, among other things, pro­vide a copy of their gov­er­nance doc­u­men­ta­tion, their lat­est au­dited fi­nan­cial state­ment, the par­tic­u­lars of the peo­ple who serve on their ex­ec­u­tive com­mit­tee (for ex­am­ple, a board of trustees) and de­tails of their manag­ing agent.

Schemes must, within four months of the end of their fi­nan­cial year, sub­mit an an­nual re­turn that iden­ti­fi­es­the mem­bers of their ex­ec­u­tive com­mit­tee and is ac­com­pa­nied by their lat­est au­dited fi­nan­cial state­ment.

The CSOS is also tasked with ed­u­cat­ing and in­form­ing all com­mu­nity scheme role-play­ers about their rights and obli­ga­tions.

The CSOS head of­fice in Johannesburg can be con­tacted by phon­ing 010 593 0533 or email­ing info@ csos.org.za. Visit www.csos.org.za to down­load a com­plaint ap­pli­ca­tion form.

The CSOS also has a Dur­ban of­fice (phone 087 805 0235) and a Cape Town of­fice (087 805 0226).

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