The ins and outs of sectional title schemes
Category Newsletter: Article
A sectional title scheme is usually a property in the form of a complex of flats or townhouses where you invest in a unit, but also own an undivided share of the common property. With that, comes a range of shared facilities such as the maintenance and upkeep of the exterior of the buildings, boundary walls, gates, gardens and so on.
According to leading managing agents, Coastal Property Management Services, it is important for buyers and tenants to understand that this type of property is now well regulated by law and that there are also certain rules and governances in place that need to be adhered to.
The Sectional Titles Schemes Management Act sets out aspects such as how trustees are elected and what their obligations are, the general meetings and voting, the establishment of a reserve fund for maintenance, various aspects around the levies, the role of the Ombud, regulations around amendments to the House Rules and a limit on the number of proxies held per person in the event of voting.
Each sectional title scheme is required by law to elect a Body Corporate which is responsible for the control, administration and management of the scheme. The Body Corporate comprises of property owners in the scheme who are elected at the Annual General Meeting of all the owners. There is usually a chairman and a board of trustees who will carry out the day to day running of the scheme. The trustees often fulfil various portfolios such as maintenance, security, gardens and so on. In most instances, the trustees appoint a Managing Agent to assist them to carry out their duties.
Each scheme also has a set of House Rules (or conduct rules) that regulate the conduct of owners and the do’s and don’ts in the scheme. These include the keeping of pets, refuse removal, general appearance around units, behaviour, noise and so on. The Body Corporate, by special resolution (with a 75% majority) can amend these rules from time to time.
Each property owner is liable for a monthly levy that covers a portion of the property taxes as well as the costs of managing the scheme including the upkeep and maintenance of the common property. It includes the cost of basic amenities such as water, sewage and refuse and in some instances, electricity. Other costs would relate to the fees charged by the managing agent and the annual audit and accounting fees. The trustees are usually responsible for setting the monthly levies. In some instances, a special levy is raised to cover a major maintenance project such as a repaint of the complex.
If you are renting in a sectional title scheme, it is vital that you familiarise yourself with the House Rules to ensure that you comply and that you do not behave in a manner that interferes with residents. If you are buying a property in such a scheme, you should also ensure that you understand all the rules and regulations around the complex including for example any rules around the keeping of pets and parking.
Author: Coastal Property Group
