This is the second article in the series of the most popular questions we are receiving from the sectional title industry, relating to the changes in sectional title administration and management, as introduced by the Sectional Titles Schemes Management Act 8 of 2011 (“the STSMA”). In this article, we will be looking at the requirement for bodies corporate to prepare a written maintenance, repair and replacement plan (“MR&R plan”) for the common property.
Requirement for a MR&R plan
Prescribed management rule (“PMR”) 22 of Annexure 1 of the Regulations to the STSMA , provides that a body corporate must prepare a written MR&R plan for the common property. PMR 24(2) further provides that the reserve fund must be used for the implementation of the MR&R plan of the body corporate.
Contents of the MR&R plan
PMR 22(1) requires the MR&R plan to set out the following:
(a) Major capital items: the major capital items expected to require maintenance, repair and replacement within the next 10 years;
(b) Current state: the present condition or state of repair of those items;
(c) Time: the time when those items or components of those items will need to be maintained, repaired or replaced;
(d) Estimated cost: the estimated cost of the maintenance, repair and replacement of those items or components;
(e) Life expectancy: the expected life of those items or components once maintained, repaired or replaced; and
(f) Other: any other information the body corporate considers relevant.
PMR 22(2) provides that the annual contribution to the reserve fund for the maintenance, repair or replacement of each of the major capital items must be determined according to the following formula:
[(estimated cost minus past contribution) divided by expected life]
In terms of PMR 22(3), a MR&R plan takes effect when approved by the members of the body corporate at a general meeting, provided that on approval of the MR&R plan, the members may specify conditions for the payment of money from the reserve fund.
PMR 22(4) provides that the trustees must report, at each AGM, the extent to which the approved MR&R plan has been implemented.
As can be seen from this article, the preparation and formula of MR&R plans can be quite a daunting task. Therefore, we suggest that should you have any queries relating to this topic, or want to find out about our Sectional title Bridging short course where the changes to our industry will be explained, contact us at firstname.lastname@example.org or on 021 686 3950.
Should you wish to read the first article in this series, “Sectional title management popular industry changes: Part 1 Reserve funds”, click here.
Article reference: Paddocks Press: Volume 11, Issue 11, Page 01.
Zerlinda van der Merwe is an admitted Attorney of the High Court, specialist Sectional Title Attorney (BA, LLB, LLM), Zerlinda brings a wealth of experience and forms part of the Paddocks Private Consulting Division.
This article is published under the Creative Commons Attribution license.