COMMUNITY SCHEMES UPDATE - OCTOBER 2022

Community Schemes are not immune to the poor economic times we find ourselves in.  Rising costs including electricity, fuel and overall 'food basket' inflation have in many instances left owners within schemes defaulting on their levy contributions.  This has a direct impact on the property's monthly collections where trustees / directors rely on all owners to pay levies timeously to ensure that the monthly expense obligations of a scheme are met.

The knock-on effect of defaulting levy payments is that monthly expense obligations (eg. service level agreements) are put under strain and preventative maintenance that had been budgeted for cannot be undertaken, which gets compounded by increases in the budgeted expenses owing to material and labour price inflation.

While we move forward from the disastrous pandemic, we recall its negative impact on statutory obligations in terms of the Sectional Title Schemes Management Act 8 of 2011 (STSMA) for body corporates and Constitutions / Article of Associations for Property Owners Associations, to hold annual general meetings.  The pandemic hampered the ability of many auditing firms (like many managing agents) to operate during the hard lockdown.  Steer & Co fortunately enabled 95% of our staff to work from home, from the day 1 of the hard lockdown, which allowed us to support trustees / directors during a very challenging period. We are relieved to no longer be playing "catch-up" on annual general meetings and it is business as usual.

Trustees have a statutory obligation in terms of the Act to perform in the best interests of all owners within the scheme.  Ongoing awareness / advice is provided to trustees to ensure they stay abreast of industry developments and expectations of trustees. Our experience in several schemes is that owners are reluctant to stand as trustees when they understand the statutory obligation they have in terms of the Act, which could be one of the reasons the STSMA introduced trustees within a scheme not being required to be owners within the scheme.  In fact, unlike the Act of 1986 where non-owner trustees were not allowed to outnumber owner trustees the STMSA is silent on the number of non-owners being nominated as trustees meaning all trustees could very well be non-owners.  This is one clause within the Act we believe needs further industry input and a possible amendment.

Owners have certainly found their "voice" where we note an increase in Community Scheme Ombudsman Service applications being made.  In most cases we have found that these cases are adjudicated in favour of the community scheme where the applicant has been uninformed or has not researched the conduct rules / management rules or the STSMA.  This ties in with our commitment to impart as much knowledge of the industry to owners / trustees in all community schemes we have under management. We are always open to educating owners within community schemes, and open to learning of course!