Are you an owner or a trustee in a new sectional title development? Were the management and administrative services, which you contribute towards as part of your levy, already in place when you became a member of the newly developed scheme?
If you have answered yes to either of the above questions, let us take a look at how the agreements, providing these services, were put in place within your scheme.
In terms of section 36(1) of the Sectional Titles Act 95 of 1986 (“the Act”), a body corporate will be established as from the date that any other person, other than the developer of the scheme, becomes an owner of a unit in the scheme. The developer, should he still have a share in the common property, and all the owners of units within the scheme, will be members of this body corporate.
The first meeting of the owners, also known as the inaugural general meeting, must, in terms of Prescribed Management Rule (“PMR”) 50(1) of Annexure 8 of the Act, be held within sixty (60) days of the establishment of the body corporate.
At this meeting, the developer, in terms of PMR 50(2)(iv), will be obliged to submit, for member consideration, any contracts relating to the continual management, control and administration of the scheme, as entered into between the developer, on behalf of the body corporate to be established, and the respective third party contractant.
Examples of these contracts may relate to the appointment of the managing agent, the service level agreement entered into for the maintenance of the elevator and other infrastructure, the agreement appointing the garden or cleaning service, or the security company.
Further to the examples listed above, PMR 50(2)(i) specifically refers to the consideration, confirmation or variation of the insurances effected by the developer.
At this first meeting, and following consideration of the contracts submitted by the developer, the members must resolve whether or not to take cession of these contracts, replacing the developer as the contracting party to the agreement, and therefore becoming liable for the payments to be made in terms of the agreement.
However, there is no obligation on the members to take cession of a contract, should they be of the opinion that any one or more of these contracts will be to the prejudice of the body corporate. In this regard, section 47(2) of the Act provides that no debt or obligation arising from any agreement between the developer and any other person, shall be enforceable against the body corporate.
Should you have any queries relating to the contracts entered into by your scheme’s developer or require our assistance with your scheme’s inaugural general meeting, contact us at firstname.lastname@example.org or on 021 686 3950.
Article reference: Paddocks Press: Volume 11, Issue 06, Page 02.
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.