Sectional Title Scheme Ownership - Part 2 of 4

by Emile Grobbelaar


Sectional Title Ownership

We continue to look at Sectional Title Ownership in this article. In my last Times, I covered the basics, from what exactly a sectional title is, to different types of areas within sectional titles and conduct rules (see part 1 here). In this week's edition we take a closer look at body corporates, trustees and their responsibilities. The following topics will be discussed:

  • Body Corporates - what are they and how are they established?
  • Annual General Meetings
  • Special General Meetings
  • Trustees - who are they and what are they responsible for?
  • How does a body corporate calculate how much each of the units owes for services?
  • Can the body corporate evict tenants for non-payment of levies?
  • What if owners do not obey the conduct rules?
  • What if tenants do not obey the conduct rules?
  • What can owners or tenants do if they think the trustees are not doing their jobs properly?


What is a body corporate?

A body corporate is a legal entity consisting of all the owners of the sectional title scheme. The body corporate exists to represent the owners and manage and control the building/complex by making sure that its financial, administrative and physical needs are taken care of.

Every owner of a unit in a sectional title scheme is a member of the body corporate. This happens automatically when you become an owner. As a result, membership of the body corporate is compulsory (you cannot refuse to be a member of the body corporate). An owner continues to be a member until they sell their unit to someone else or pass away.

The body corporate has to meet at least once a year at an annual general meeting (AGM).

 

How is a body corporate established?

When a developer builds a complex or block of flats, they will open a Sectional Title Register on the day that the first unit is transferred to the first owner. Once there are enough owners, the developer will call the first general meeting to formally establish the body corporate.

 

What is an annual general meeting (AGM)?

An AGM is a meeting held once a year by the body corporate (all the owners), trustees and managing agent.

This meeting is held so that the trustees and managing agent can report on important issues. It also allows the body corporate to make important decisions.

The AGM must be held within four months of the end of each financial year, unless the owners or trustees decide otherwise at a general meeting.

The financial year runs from the first day of March to the last day of February.

A quorum (a certain percentage of all the owners in the scheme) must be present before the AGM can commence, and this depends on the number of units in a complex.

 

What should be discussed at the AGM?

The following issues should be discussed at the AGM:

  1. The trustees or managing agent must explain the audited financials and the trustees must provide a report which explains the work that they have been doing.
  2. The body corporate must discuss and approve the insurance schedules and annual budget (with or without changes).
  3. The body corporate should appoint an auditor or accounting officer.
  4. The body corporate must decide on the number of trustees for the following year.
  5. The body corporate must elect the trustees for the following year. Some or all of the trustees from the previous year could be re-elected, or completely new trustees could be elected.
  6. If any member of the body corporate has earlier informed the body corporate that there is some special business to discuss, that can also be done.
  7. The body corporate can give directions and set restrictions (limitations) on the powers of the trustees.
  8. The body corporate has to decide on the legal address of the body corporate (the domicilium citandi et executandi). This is the address where the legal notices of the body corporate will be delivered.

If a managing agent is appointed, the legal address would usually be his / her address (to make it easier to manage the scheme).

 

How does voting work at AGM's?

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