Amending management and conduct rules in Sectional Title schemes

Even though the Sectional Titles Schemes Management Act 8 of 2011 ("the STSMA") came into effect on 7 October 2016, many bodies corporate are still operating with management or conduct rules established in terms of the previous Sectional Titles Act 1986, or even the Sectional Titles Act of 1971!

With this in mind, it is reasonable that we see so many bodies corporate taking the leap and begin the process of amending their scheme's management and conduct rules. However, they're often stuck and not sure where to start - trying to navigate the rough waters of what the STSMA requires, as well as the large waves often thrown in by the Community Schemes Ombud Service ("the CSOS") during this process, can be a dangerous task for bodies corporate.

That's what this article is for! To help bodies corporate navigate the rough seas of rule amendments, we have compiled the straight-forward legal processes that must be followed each time a body corporate would like to amend their management or conduct rules.

We'll start with section 10 of the STSMA. Section 10(2)(a) of the STSMA provides that a body corporate can remove, amend, substitute and add to the prescribed management rules. This is done by means of obtaining a unanimous resolution of the members of the body corporate. Any changes to the management rules will only be acceptable to the extent that it does not contradict any rule found in the Prescribed Management Rules ("the PMRs"), or any clause in the STSMA. Section 10(2)(b) of the STSMA is extremely similar to the above, and provides that conduct rules may be removed, amended, or substituted and added to the prescribed conduct rules, provided that a special resolution of the members is first obtained. Any conduct rule cannot contradict a prescribed management rule, or clause found in the STSMA.

Now we know the types of resolutions required to change the rules, how can bodies corporate action these resolutions?

Section 6(2) of the STSMA provides that the body corporate must, at least 30 days prior to a meeting of the body corporate where a special resolution or unanimous resolution will be taken, give all the members of the body corporate written notice specifying the proposed resolution, except where the rules provide for shorter notice. This means that the meeting where the unanimous or special resolution regarding the passing of the rules will be considered must be called on 30 days' notice.

However, both of these resolutions can also be taken via round robin, i.e. through writing, and the below must be considered:

(a) In the case of the management rules: 100% of all owners within the body corporate will need to consent to the management rules in writing, and

(b) In the case of the conduct rules: 75% of all owners within the body corporate will need to consent to the conduct rules in writing.

After amending your rules and successfully passing them at the relevant general meeting, or via round robin, you now need to submit these rules to the CSOS along with a few other documents.

The complete list of documents to be emailed to the CSOS are as follows:

(a) The consolidated set of management and/or conduct rules;

(b) The completed CSOS Form B, available of their website;

(c) A trustee signed copy/ies of the unanimous and/or special resolution confirming that the rules were passed at a general meeting or via the round robin process, and

(d) The signed minutes of the meeting where the resolutions were passed, illustrating the quorum, or proof that the resolutions were successfully passed as per the round robin process.

The above documents need to be emailed to sectionaltitle@csos.org.za, and the turnaround time for quality assurance is up to 30 days for existing schemes.

During this time, the CSOS may contact the scheme and make requests for amendments to be made to some of the rules. Once these amendments are made, the CSOS will approve the rules and provide the scheme with a section 10 certificate of approval.

It is very important to note that the effective date of the amended rules is the date that the CSOS issues the certificate approving the amendments. Only once this certificate is received can the body corporate begin implementing the amended rules.

It is vital that you have management and conduct rules specific to your scheme, and as you can see from the above, it is a fairly simple process to follow, the most difficult part is often deciding on which rules should be amended or added.