On 5 February, Graham and I had the privilege of attending a stakeholders meeting with the Sectional Titles Schemes Management (STSM) Advisory Council. This Council plays a crucial role in advising the Minister of Human Settlements on necessary legislative amendments in the sectional title sector. Having never attended a meeting of this nature before, I wasn’t sure what to expect, but I was pleasantly surprised by the professionalism, engagement, and openness of the Council. The members genuinely valued stakeholder input, giving us hope that real, positive legislative changes may be on the horizon.
Key Stakeholders Present
The meeting brought together a diverse group of industry experts, including representatives from:
- Paddocks
- BBM Law
- Sectional Title Solutions (STS)
- Federation of the Urban Poor (FEDUP)
- South African Institute of Black Property Practitioners (SAIBPP)
- South African Property Owners Association (SAPOA)
Critical Issues Discussed
The meeting was packed with insightful discussions. Here are the standout issues raised:
1. Regulation of Illegal Section Extensions
Currently, owners who extend their sections without proper approval avoid paying adjusted levies based on their increased floor area. Proposed amendments would:
- Allow the body corporate (after obtaining a special resolution) to appoint a land surveyor or architect on the owner’s behalf to draft the required amending sectional plan.
- Empower the body corporate to charge the owner increased levies based on the actual floor area, even before the updated sectional plan is registered.
- Clearly define that the owner is responsible for all maintenance and repair costs related to the unapproved extension.
2. Improving Levy Collection Mechanisms
A key issue was the difficulty bodies corporate face in recovering arrear levies. Overseas models were discussed where banks share liability for unpaid levies if they granted a bond on the unit. A similar mechanism in South Africa could significantly reduce levy defaults.
3. Short-Term Letting Regulations
Stakeholders emphasised the need for clearer legislation governing short-term rentals in sectional title schemes to balance owner rights and scheme management.
4. Preventing Developer Abuse of Regulation 6(4)
This regulation allows developers to assign the rights and obligations of subsidiary bodies corporate to an overarching Master HOA in a layered scheme. Unfortunately, developers have used this provision to retain excessive control over schemes long after they should. Amendments were suggested to better protect sectional title owners.
5. Winding Up a Sectional Title Scheme
Section 17 of the STSM Act, which deals with deemed destruction of a scheme, lacks a structured ‘winding-up’ process similar to company liquidations. A proposal was made to introduce such a mechanism.
6. Modernisation of the STSM Act
- Section 6(3) requires meeting notices to be sent by registered post—an outdated requirement. The suggestion was to allow for modern communication methods.
- Ordinary resolutions should be able to be passed in writing—currently, PMR 17(9) is the only provision which allows this and makes it nearly impossible.
- Quorum requirements should be reconsidered, as the current thresholds result in frequent adjournments of general meetings.
7. Reintroducing Previously Removed Provisions
Stakeholders called for the return of two provisions that were in previous legislation:
- Allowing schemes with 10 or fewer units to appoint an accounting officer instead of an auditor.
- Disqualifying trustees who are in levy arrears from holding office.
8. Addressing Issues in ‘Duet’ Schemes
The meeting discussed the exclusion of two-section schemes (‘duet’ schemes) from requirements that are impractical for such small schemes.
9. Need for a Separate HOA Act
The Companies Act and common law are not well-suited to regulating HOAs. Stakeholders strongly recommended drafting a separate Act specifically for HOAs.
10. Interaction Between the STSM Act & POPI Act
There is uncertainty around what personal information of sectional title owners and residents can be shared under Section 3(1)(n) of the STSM Act and PMR 27(4). Stakeholders called for clarity on data privacy and compliance requirements.
11. Administrator Appointments Under Section 16 of the STSM Act
Currently, Magistrates’ Courts appoint administrators for struggling schemes. It was suggested that this be handled by the Community Schemes Ombud Service (CSOS) instead, which already has an Executive Managing Agent panel.
12. Encouraging CSOS Registration
Many sectional title schemes remain unregistered with CSOS. A proposed solution: Banks should require proof of CSOS registration before granting home loans—this would ensure greater compliance.
13. Fines & Penalties Framework
The STSM Act provides no guidance on fines or penalties for violations of the STSM Act and scheme rules. A proposal was made to standardise the process and amounts to ensure fair enforcement.
14. Trustee Education
Currently, trustees are not required to undergo any training on sectional title laws. A suggestion was made to introduce mandatory trustee education to improve scheme governance.
What’s Next?
The STSM Advisory Council took these proposals seriously, and plans to take them to the Minister of Human Settlements for consideration. We hope to see some of these changes reflected in future legislative amendments.
This meeting reaffirmed the importance of collaboration between government and industry stakeholders in shaping the future of sectional title management. We will keep you updated on further developments!
Do you have any thoughts on these proposed changes? Or any suggestions of your own? Let us know!
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Article reference: Paddocks Press: Volume 20, Issue 2
This article is published under the Creative Commons Attribution license.
