With sectional title units remaining a very popular choice amongst first time buyers as well as those wishing to scale down (even in a tough economic climate), it is no surprise that more and more people are trying their hand at developing sectional title schemes. This can be as simple as building 2 houses on one erf and then sectionalising the property, or as complicated as building a skyscraper that includes restaurants, offices, shops and apartments of all different shapes and sizes. Regardless of the nature of the development, they all have a few things in common, one of which is the holding of the development’s inaugural meeting.
This first general meeting must be called by the developer and bears little resemblance to other general meetings held by bodies corporate. It is therefore very important that first time developers take note of the unique requirements of this meeting.
When must it be held?
This meeting must be held within 60 days of the date on which anyone other than the developer becomes an owner of a unit in the scheme.
What are the items that have to be on the agenda for this meeting?
The agenda has to include all items listed in Prescribed Management Rule (“PMR”) 16(2), including (but not limited to) motions to ratify the terms of any contracts entered into by the developer on behalf of the body corporate. To approve the developer’s evidence of income and expenditure relating to the scheme’s management from the date on which any unit in the scheme was first occupied, until the date on which anyone other than the developer became an owner of a unit in the scheme.
What documentation must accompany the meeting’s notice and agenda?
All those mentioned in PMR 16(2), as well as a comprehensive summary of the body corporate’s rights and obligations under policies and contracts entered into by the developer on behalf of the body corporate.
What additional documentation must be given to members at the meeting?
- A copy of the sectional plan;
- A certificate from the municipality confirming that the developer has paid all rates due by them; and
- Proof of all income and expenses relating to the management of the scheme from the date of the first occupation of a unit, until the date on which anyone other than the developer became an owner of a unit in the scheme. Any residue must then be paid over to the body corporate.
It is important to note that a developer will be guilty of an offence and liable on conviction to a fine and/or imprisonment for up to 2 years if they fail to:
- convene such meeting timeously (or at all);
- include all agenda items as prescribed in PMR 16;
- furnish the members with all documentation set out above; or
- pay over the residue referred to above.
If you are concerned about whether or not your notice complies with the relevant legislative requirements, you are welcome to email a copy of the notice and supporting documentation to email@example.com and we will be in touch with a no-obligation quotation, to review your documentation and assist you with compliance in this regard.
For more, download the Developer Handover Guide.
Article reference: Paddocks Press: Volume 15, Issue 1.
Specialist Community Scheme Attorney (BA (Law) LLB), Ané de Klerk, combines her work experience as a Portfolio Manager with knowledge of conveyancing and community scheme law.
This article is published under the Creative Commons Attribution license.