The Community Scheme Ombud Service Act, No. 9 of 2011 (“the CSOS Act”) came into force on 7 October 2016. In terms of the CSOS Act, “community schemes” include:

1. Sectional titles development schemes in terms of the Sectional Titles Act (Act 95 of 1986);
2. Share block companies governed by the Share Blocks Control Act (Act 59 of 1980) and the Companies Act (Act 61 of 1973), soon to be replaced by Act 71 of 2008;
3. Home or property owner’s associations, whether constituted as companies under the Companies Act or as common law associations, established to administer property developments;
4. Housing schemes for retired persons in terms of the Housing Developments for Retired Persons Act (Act 65 of 1988); and
5. Housing co-operatives under the South African Co-operatives Act, 2005 (Act 14 of 2005), as well as any other scheme or arrangement in terms of which there is shared use of and responsibility for parts of land and buildings.

The purposes of the Community Scheme Ombud Service (the “Service”), set out in clause 4 of the CSOS Act, can be summarised as being to:

(a) provide a dispute resolution service with national reach for community schemes;
(b) train conciliators, adjudicators and other Service employees;
(c) take custody of, control the quality of and provide public access to all sectional titles scheme governance documentation and any other such documentation determined by the Minister; and
(d) promote good governance of community schemes and monitor that governance;
(b) provide education, information, documentation and services to raise awareness of owners, occupiers, executive committees and others who have rights and obligations in community schemes.

DISPUTE RESOLUTION

When a community scheme’s governing body (defined in the CSOS Act as the “association”), an occupier or an owner has a dispute in regard to the administration of that scheme with any other person who also has a material interest in that scheme, they will be able to approach the Service for assistance in resolving that dispute. The process involves the prior use of internal dispute resolution mechanisms. Where these prove ineffective and a dispute is referred to the Service, the first option will be professional conciliation, but where this fails or seems unlikely to succeed, the matter will be referred to an adjudicator for fast-tracked resolution.

The CSOS Act does not give the Service unlimited jurisdiction in the sphere of community scheme administration disputes. The dispute must fall into one of the categories set out in section 39 of the Act under the headings: Financial issues; Behavioural issues; Scheme governance issues; Meetings; Management services; Works pertaining to private areas and common areas and General and other issues.

TRAINING OF CONCILIATORS, ADJUDICATORS ETC.

The CSOS Act recognises that the skills necessary to operate the dispute resolution processes may not be generally available at reasonable cost and therefore specifies that one of the Service’s functions is to train conciliators and adjudicators. The persons who carry out these functions on a full or part-time basis will need a working knowledge of the law and practices involved in the operations of the relevant community schemes as well as in the processes of investigation, conciliation or adjudication.

It is inevitable that some of those trained by the Service will use their skills in other contexts. When they operate outside the Service, these people’s skills will serve to raise the general level of understanding of the operations of community schemes in South African society and in this way further the overall objectives of the Service.

REGISTRATION AND GOVERNANCE DOCUMENTATION

Community schemes must register with the Service by completing and lodging Form CS 1 with the Service within 30 days of 7 October 2016. This form requires comprehensive information about the scheme and copies of its governance documentation. The governance documents for share block schemes, for property and home owners’ associations that are incorporated as companies and for housing co-operatives are kept and controlled by the Companies and Intellectual Property Commission. The governance documentation for sectional titles schemes, including those retirement developments that are sectional titles schemes, is currently filed at the deeds registries.

The regulations under the CSOS Act also require that all community schemes must submit annual returns to the Service with a copy of their annual financial statements and other prescribed documents. The form for this annual submission is Form CS 2.

FUNDING

The Service will be funded by scheme levies and application fees collected from January 2017. There is a exemption for owners whose scheme levies are less than R500, and a sliding scale from R2 to R40 per month (the maximum) applies to those whose levies are higher. The application fees are R50 for conciliation and R100 for adjudication.

MONITORING

In terms of the CSOS Act, all community schemes must render to the Service, including copies of a scheme’s annual financial statements.

At present there are many community schemes that operate without regard for the requirements of their governance documents and any statutes that may govern their operations. The fact that community schemes will have to prepare annual returns to the Service will serve as an annual reminder to scheme executives and managing agents of the necessity to comply with the requirements of these provisions.

RAISING AWARENESS AND EDUCATION

The CSOS Act recognises that it is important to educate those who have rights and obligations in community schemes and to raise awareness amongst them so as to prevent disputes, a significant number of which are caused by a lack of information and understanding of community schemes. It is expected that the Service’s public education programme will commence in 2017 and be rolled out throughout South Africa.

PADDOCKS ROLE

Paddocks have been retained by the CSOS to train its staff on both the CSOS Act and the Sectional Titles Schemes Management Act. In addition to the CSOS training, Paddocks offers two new courses to the public – a Sectional Title Bridging short course and the UCT Scheme Manager – Sectional Title short course (presented in conjunction with the University of Cape Town). A further Paddocks short course on CSOS Applications, Conciliation and Adjudication will be available in 2017.

CONTACTING THE CSOS

There are CSOS regional branches in Cape Town, Sandton and Durban. The Ombud for the Western and Eastern Cape is Ms Maletsatsi Maceba-Wotini and her CSOS office is on the 8th Floor of Constitution House in Adderley Street. Those who are involved in community schemes and have a dispute as to some aspect of its management can email the Cape CSOS office at: wc-complaints@csos.org.za. Their telephone number is 087 805 0226.

The Guide to CSOS Applications for Dispute Resolution

Paddocks has designed a free, online guide to assist you in understanding the CSOS, the types of orders it can grant and the process of putting together an application for dispute resolution. Click here to visit the guide and minimise the chance of your order being rejected unnecessarily.

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Article reference: Paddocks Press: Volume 11, Issue 10, Page 01.

Prof. Graham Paddock is considered by many to be the authority on Sectional Title scheme management law and practice in South Africa, Prof. Paddock has specialised in sectional title, homeowners’ associations and other forms of community scheme law for over 40 years.

This article is published under the Creative Commons Attribution license.

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