CSOS vs Sectional Title Act: Do you know these 14 differences?
The Community Scheme Ombud Service Act and the Sectional Title Schemes Management Act were each gazetted one month ago. While these acts have certain things in common, there is confusion as to which regulations refer to which acts and how they apply to share scheme and sectional title property.
Karien Coetzee, national property management consultant at property management company, Trafalgar, sheds some light on the issue.
The CSOS Act applies to all community schemes, which include sectional title, homeowners associations, share blocks etc and the most important items in the legislation are
- All schemes must appoint an authorised representative
- Schemes must have registered with CSOS by (practically) Friday 4 November, 2016 (form CS1)
- Supply CSOS with the scheme’s governance documents (rules, AFS) before 5 January, 2017
- Raise CSOS levies monthly from 1 January 2017 (2% of basic levy greater than R500, at a maximum amount of R40 per unit per month)
- Arrange adequate fidelity insurance cover
- Submit annual returns to CSOS (AFS within 4 months of year-end)
- May use CSOS as an alternative dispute resolution mechanism
Sectional title act: the big 7
The Sectional Titles Schemes Management Act only applies to sectional title complexes, and not to other schemes like homeowners associations and share blocks etc. The most important items in this legislation include
- Insurance: The act now specifies a minimum amount of public liability cover, same being R10m; and the requirement that all bodies corporate do a formal and professional valuation at least once every three years
- Levy collections: No amounts other than a levy or amount due in terms of the act, body corporate’s rules, judgement or order may be debited to an owner’s account. Interest on overdue levy amounts may be charged at a rate not exceeding the maximum interest rate per the National Credit Act, that being incidental credit agreements limited to 2% per month compounded being an effective annual rate of 26.82%
Rules: All rules must be approved by the Ombud and will only become enforceable from the date that it was certified by the Ombud (in the form of a certificate)
- Meetings: A person must not act as a proxy for more than two members. The act now directs that voting for ordinary resolution be done in value as per the participation quota (PQ); Quorum requirements:
- When fewer than 4 primary sections or fewer than 4 members the quorum requirement is that members entitled to vote and holding two thirds of the total votes of members in value
- All other schemes, members entitled to vote and holding one third of the total votes of members in value
- Maintenance plan: The act now requires all bodies corporate to prepare a formal 10-year maintenance, repair and replacement plan, for the common property for all major capital items as defined
- Financial management: The new act specifies minimum reserve requirements which link directly to a legislatively required maintenance plan
The act further requires the formation of two separate funds, same being the Administrative Fund and the Reserve Fund
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Who is Karien Coetzee?
Karien Coetzee is the national property management consultant at property management company, Trafalgar. She holds qualifications in sectional title schemes management and homeowners association management.