Two of the key subjects of disputes in sectional title schemes are funding maintenance works in the scheme and exclusive use areas. In this article, I’ll take a closer look at the spot where these two intersect – namely the funding of maintenance to be done on these exclusive use areas. If you are thinking to yourself”: “I know who is responsible to foot that bill”, I encourage you to keep reading as that is only half the story told.
1. Who pays the contractor’s bill?
Let’s say that a contractor has been appointed to waterproof a balcony that is subject to exclusive use rights. The entity responsible to have this maintenance performed is the body corporate (remember common property that has been subjected to exclusive use rights is still common property). It is the body corporate that will obtain the relevant quotes, appoint a particular contractor, inspect the works and finally pay the bill.
2. Where does the money come from?
This bill will be paid from funds collected by the body corporate from the owners of sections entitled to exclusive use rights. In practice, this means that the cost is covered by what is commonly referred to as “exclusive use levies”.
3. How should the money be collected?
The most common misconception I have come across in this regard is that the body corporate is under the impression that they can simply collect the cost of the balcony’s waterproofing when it is time to pay the contractor. This is clearly at odds with the legislator’s intention. Here’s why:
The Sectional Titles Schemes Management Act requires that holders of exclusive use rights are to make such additional contributions as are “estimated necessary” to defray the cost of the maintenance to be performed on that particular area. If it were the legislator’s intention that the actual cost is simply to be recovered when or subsequent to the maintenance being done, the word “estimated” would not have been included in the wording used. In fact the word “estimated” here clearly shows that the contribution is to be made before the actual cost of the project is known. This is to be a contribution in advance. From context, in taking into account the two sections immediately preceding this one, it is clear that these contributions are to be dealt with similarly to those collected to fund the scheme’s administrative and reserve fund expenditure: contributions to be made continuously to cover future expenditure.
4. Why does this matter?
Six of one, half a dozen of the other as long as the body corporate is collecting the funds from the holder of the exclusive use right, right? Wrong. Imagine that the body corporate has adopted this “we will collect the funds when they become payable” approach. For 10 years Mr Original Owner enjoyed his exclusive use rights over his balcony. During this time he enjoys the space, but never pays exclusive use levies as the body corporate never asks him to and he finally sells his unit. Two months after Mrs New Owner takes transfer of the property, the body corporate presents her with a bill for R15 000.00 for waterproofing work to the balcony. Clearly, the funds to pay this waterproofing bill should have been gradually collected over the past 10 plus years, rather than simply collected in one go from the current owner. One could hardly conclude that this is a fair and reasonable application of the relevant legislation.
The common argument of course is “we have been doing it this way for years” – if that is you, I implore you to read section 3(1)(c) again carefully and to amend your modus operandi to be perfectly aligned with the relevant legislation. Unsure how to do this and concerned that you may also unknowingly be doing other things that are contrary to legislation? Consider registering for the next intake of the Paddocks UCT Scheme Manager Sectional Title online short course to grow your knowledge and obtain the know-how to tick all the right boxes.
Article reference: Paddocks Press: Volume 17, Issue 4.
Specialist Community Scheme Attorney (BA (Law) LLB), Ané de Klerk, is a Director at The Advisory, a boutique law firm specialising exclusively in community scheme law.
www.theadvisory.co.za.
This article is published under the Creative Commons Attribution license.
Recent Posts
Archives
- October 2024
- August 2024
- July 2024
- June 2024
- May 2024
- April 2024
- March 2024
- February 2024
- January 2024
- December 2023
- November 2023
- October 2023
- September 2023
- August 2023
- July 2023
- June 2023
- May 2023
- April 2023
- March 2023
- February 2023
- January 2023
- December 2022
- November 2022
- October 2022
- September 2022
- August 2022
- July 2022
- June 2022
- May 2022
- April 2022
- March 2022
- February 2022
- January 2022
- December 2021
- November 2021
- October 2021
- September 2021
- August 2021
- July 2021
- June 2021
- May 2021
- April 2021
- March 2021
- February 2021
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014
- December 2013
- November 2013
- October 2013
- September 2013
- August 2013
- July 2013
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- March 2009
- February 2009
- February 2008
- February 2007
Recent Comments