Letter: New Sectional Title Management Act good for sectional title owners?

May 29, 2018 | News

Owners of Sectional Title Schemes should have a far simpler act with some very basic principles and then be left to get on with it.

Battling with the complexities of the new Sectional Title Management Act (STMA), Mike Spencer, professional valuer with Platinum Global, wrote in a letter to Property Professional that he thinks the Act should be simpler or perhaps even scrapped and the ‘practical and well-understood’ Sectional Title Act brought back. Coenie Groenewald, COO of the National Association of Managing Agents, while acknowledging that aspects in the Act may give rise to confusion, advises to give the new legislation more time.

Mike Spencer, professional valuer with Platinum Global wrote: In essence, a body corporate is made up of a mix of investors with tenants and owners who live in the sectional title scheme that they have bought in. Few of the buyers are professional attorneys or accountants and many are simple working-class folk.

Yet the new Sectional Title Management Act (STMA) is written in a way that few owners understand, and many body corporate managers find it time consuming and complicated to comply with: Special long-term reserves, detailed reporting to CSOS (Community Schemes Ombud Service), an almost impossible level for quorums, limits to the number of proxies that any particular attendee can hold – two.

Trustees, all of whom are volunteers, can be held personally liable for any mistakes that they make, rules that are virtually impossible to change, owners who are in arrears who still have the right to decide on how and who runs the body corporate and Trustees who are seriously in arrears or defaulting in terms of the Rules, who can only be thrown out as trustees if the body corporate takes them to court to prove that they are in arrears – when it is these very trustees that have to decide who to hand over.

Owners of Sectional Title Schemes should have a far simpler act with some very basic principles and then be left to get on with it. Quorums should be left up to the Rules of the individual building. While 50% may well be fine for a small scheme under 10 units it is totally inappropriate for a scheme of 12,000 units (yes some are this size).

While a building where most of the owners live in the building can easily hold a meeting in the same area, the same cannot be said for a holiday flat building on the coast where NO owners live in the scheme.

The reality of the new STMA is that many AGMs are simply held over for a lack of a quorum. I personally had to travel 700km twice in one week, to attend an AGM because there was not a quorum. The meeting was held over to the next week same time same place. Only two people attended other than me. In other words, those three people who did attend acted for the 66 people who owned units in the building! How can that be fair? Worse still is that at the original AGM just below the 33% of people needed did attend and they could not have a say in running the building. In practice what is happening now is the stalwarts who usually braved the distance, dark, rainy cold weather in winter to attend AGMs are no longer bothering – because they know that there will not be a third of the owners present or by proxy. To make matters worse an attendee can only hold 2 proxies. How on earth is an owner able to tell, 1) Who will attend or, 2) Do they have any proxies already?

This is totally at odds to the Companies Act where anyone can represent anyone else without restriction. Why should it not be the same here?

I know that somebody will say that one owner went around getting proxies and controlled the meeting. So what! – I should be able to give my proxy to anyone I wish. If I don’t like the result I won’t give that person a proxy next time.

I could go on and on about the red tape that has been introduced with the STMA – the old act has not been cancelled and you have to look from one act to the other. What has happened is the act is so complicated that owners are using it as an excuse to confront the management with “The Act”, while these same schemes were well run, had good funds, had good reserves and were working just like the owners wanted them to be under the old act.

I am sure that you would receive numerous other examples from the people in the know.

Perhaps it is time to scrap this act, loose CSOS, and to go back to the well understood and quite practical old Sectionals Titles Act.

Coenie Groenewald, COO of the National Association of Managing Agents (NAMA) responded: The new legislation [STMA] is here to stay and we do not at present anticipate that it will be abolished, in fact the anticipated Property Practitioners Bill will further influence the industry

Since engagement with Government on the matter NAMA has advised that we support the process and the implementation thereof as the previous Sectional Titles Acts, both the 1971 Rules and Act 95 of 1986 may have been long overdue for change.

It is true that there are many aspects in the STMA that may elicit confusion, concerns and challenges, change is never easy and not always accepted and the issues noted in the communication is but a few.

Most of the changes may be considered as being positive and will benefit not only the owners of Schemes but scheme management as a profession.

It is of utmost importance that education and understanding of the new legislation is promoted, hence NAMA is providing such training on a large scale and at national level.

Since inception of the STMA in November 2016 we have received various levels of communication on issues and problems experienced with parts of the Act and we have already engaged with the CSOS to arrange a meeting so that these challenges can be addressed.

One of these is the establishment of the Regulations Board, which is the entity that will have to address changes in the legislation, here NAMA and its members’ comments will play a vital role.

We are awaiting confirmation on the meeting dates and have written to the Minister to expedite the process.

The current legislation has been in use for less than two years and failing the legislation before a reasonable time period of testing and deliberation may not be the initial and only remedy.

We take the comments received in consideration and will ensure that when we do engage these will be included in the deliberation process.

(The opinions expressed in letters are those of the author and do not necessarily reflect those of Property Professional. Ed.)

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