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Tuesday May 14, 2013

Stricter control over election of body corporate trustees

On 14 March 2013 amendments to the Sectional Titles Act of 1986 were gazetted and became operational during the month of April.

According to Martin Bester, Managing Director of Intersect Sectional Title Services, a sectional title specialist company based in the Western Cape, of particular relevance to owners and occupiers in sectional title schemes are the amendments to Annexure 8 (the Prescribed Management Rules or PMR) of the Act.

"Prescribed Management Rule number 7, which deals with the way in which the trustees of a body corporate are to be elected, was amended to exclude nominees who are, at the time, in persistent breach of the Conduct Rules (notwithstanding a written warning to refrain from same); and further to exclude any nominee who is indebted to the body corporate," says Bester.

"This amendment applies predominantly to nominees who are also owners or occupiers within the body corporate, as only they could be indebted to the body corporate or in breach of its rules. However, the Act does not require that a trustee be either."

The next amendment sees the insertion of Prescribed Management Rule 13 (g). Bester explains that PMR 13 (a-f) deals with the disqualification of trustees, whereas PMR 13 (g) now provides further for any trustee indebted to the body corporate for a period in excess of 60 days to be disqualified should they fail to settle the debt within seven days of being notified to do so.

Lastly Prescribed Management Rule 31 (4A), which allowed trustees to, at their discretion, increase the levies charged by up to 10% at the beginning of the financial year, was replaced by PMR 31 (4B). This amendment now requires that levy increases form part of the proposed budget and be applied for and approved at the AGM.

According to Bester this amendment is not ideal as being able to increase levies at the beginning of a financial year allowed the trustees to effectively ensure that the levies for that applicable year were in line with the expenses and budget accordingly (provided the levy increase required was under 10%), whereas the AGM is typically three to four months after the beginning of the financial year.

"This simply means that should a body corporate require a levy increase within a financial year, the 1st quarter of the financial year is missed and the resultant increase could be greater or it could result in backdated increases which are a particular problem in commercial or VAT registered schemes."

"PMR 31 (4B) on the other hand basically allows for the trustees to call for special levies or contributions from the members for expenses or costs, over and above those already provided for in the approved budget, and for these to be paid in whichever way the trustees deem fit," concludes Bester.

Intersect Sectional Title Services Press Release


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