Note: What follows is of necessity only a brief overview of some very complex new provisions and, particularly if you are a trustee or administrator, it is essential that you familiarise yourself with all the changes. Contact us if you need any help.
The Sectional Titles Schemes Management Act (“STSM”) applies only to sectional title schemes and replaces the old Act’s Management provisions. It came into effect on 7 October 2016, together with the related Community Schemes Ombud Service Act (see next article).
The 10 year plan and reserve fund requirements
Bodies Corporate and Trustees in particular need to know about their new responsibilities and liabilities, amongst which is the well-publicised new requirement to prepare a 10 year plan for maintenance, repair and replacement of capital items. You must support this with a reserve fund sufficient to cover the cost of future maintenance and repair of common property.
The minimum level for this reserve fund has been set at 25% of the previous financial year’s “administrative fund” (the fund for operating costs) levies. If your scheme is short of this requirement (it will be if you have in the past relied on special levies to fund exceptional expenses as they arise), your levies will increase by at least 15% (in addition to any normal annual increase) until you catch up.
Other key changes
- The Body Corporate must notify (on Form A of the Regulations) the Chief Ombud, local municipality and registrar of deeds of its domicilium citandi et executandi address for service of process
- Changes to the procedures for the calling and conduct of meetings include a provision that no attendee can act as proxy for more than two members
- There is a 3 year revaluation requirement for all buildings and improvements, the valuation to be presented to an AGM for approval of insurance schedules
- A body corporate may charge interest on arrear levies, and other overdue amounts payable to it by a member, compounded monthly in arrear, at the maximum rate under the National Credit Act (Repo Rate + 21%).
The post Sectional Title Schemes: New Reserve Fund Requirement and Other Key Changes appeared first on KVV Inc..