The prescribed management and conduct rules contained in Annexure 8 and 9 of the Regulations made under the Sectional Titles Act 95 of 1986 (“the Act”) need not apply in exactly the prescribed form to every new scheme.
A developer has some flexibility in determining the content of the rules. The Regulations provide two circumstances in which the prescribed rules can be substituted. In the first place the developer can substitute, add to, amend or withdraw certain of the prescribed management rules specified in Regulation 30(1) when submitting an application for the opening of a sectional title register.
Some of the rules that cannot be changed include the rules relating to the amendment of the rules; qualifications, election, remuneration, indemnity and removal from office of trustees; record of rules and their availability; improvements to common property; books of account and records; the audit; deposit and investment of funds; and appointment of the managing agent.
On opening the register, a developer can substitute other rules for any of the prescribed conduct rules. In terms of section 35(2) of the Act, the developer may not replace any prescribed conduct rule with a rule that conflicts with any prescribed management rule. In terms of section 35(1) of the Act, the management and conduct rules are subject to the provisions of the Act and may therefore not be inconsistent with any provision of the Act. Where the developer makes no alternative arrangements, then the prescribed rules will apply.
In the second place it is also possible for the developer to substitute any or all of the prescribed management rules (contained in Annexure 8 of the Regulations made under the Act) if certain conditions are met. In terms of section 11(2) of the Act a developer may impose registrable conditions when making application for the opening of a sectional title register and the registration of a sectional plan. This is done in the 11(3)(b) certificate which is certified by a conveyancer. The 11(3)(b) certificate sets out:
- the servitudes and conditions of title burdening or benefiting the land;
- other registrable conditions imposed by the developer; and
- other particulars as may be prescribed.
In terms of Regulation 30(2) the prescribed management rules will not apply to a scheme if the schedule referred to in section 11(3)(b) of the Act contains a condition restricting transfer of a unit without the consent of an association whose constitution stipulates that:
(a) all members of the body corporate of the development scheme of which the unit forms part must be members of that association, and
(b) the functions and powers of the body corporate must be assigned to that association.
It is important to note that Regulation 30(2)(a) requires that all the owners of the body corporate must be members of the association before the prescribed management rules can be substituted in their entirety. It is therefore not correct that the body corporate be made a member of the association.
Regulation 30(2)(b) requires that all the functions and powers of the body corporate must be assigned to the association. It is important to note that these rules will still be subject to the Act. Therefore the body corporate would still need to elect trustees in terms of section 39 of the Act. It is possible that the directors of the association fulfill the role of trustees, but they would still need to administer the scheme in conformity with the provisions of the Act.
Finally the substituted management rules would need to be reasonable, and apply equally to all owners of units put to substantially the same purpose in terms of section 35(3) of the Act.
This type of condition is used for schemes that require rules very different to those prescribed. For example it is used to regulate schemes that operate retirement villages, hotel operations, time-share and other holiday resorts. Such a title condition may also be used to provide a single management structure for one or more sectional title schemes in a larger complex that operate under the umbrella of a masters homeowners association.
Are you experiencing any problems in your scheme relating to developer-made rules or your scheme rules in general? Why not contact Paddocks to assist you in this regard?
Image source: househyderabad.com
Article reference: Paddocks Press: Volume 10, Issue 11, Page 1.
Carryn Melissa Durham is one of the most highly qualified Sectional Title lawyers in the country (BA. LLB, LLM and currently completing her Doctorate in the subject), Carryn forms part of the Paddocks Private Consulting Division.
This article is published under the Creative Commons Attribution license.