Maintenance of exclusive use outbuildings and equal levies

Question:
Our body corporate had our meeting on Saturday. There was a question about maintenance; who pays for maintenance of outbuildings and garages where unit owners have exclusive rights? Please note that there is no participation quota and everyone pays the same levy.

Answer:
The Sectional Titles Act, 1986, specifically requires that any amounts spent by a body corporate on maintenance of an area of common property which is subject to exclusive use rights must be recovered from the owner who holds those rights.

There is no sectional title scheme that does not have a participation quota schedule as the last page of its sectional plan. All schemes also have management and conduct rules and it is possible that in your scheme there is a rule which states that all owners will pay equal levies. But this is a very unusual situation and you should get a copy of your scheme's rules from the Deeds Registry to check whether this is in fact the case. If there is no special rule in this regard, all communal expenses must be recovered from owners in accordance with their participation quotas.

In many schemes trustees have at some stage decided that it would be much fairer for everybody to pay the same amount each month, either overall or for a particular expense and they have managed the scheme accordingly. But there are very few schemes in which this is in fact the legal position. A failure to collect the correct amounts from owners can cause very serious and expensive disputes when those who have been over-charged demand to be compensated.

Share of profits due to Body Corporate

Question:
How can a body corporate justify taking a 10 percent 'enhancement levy' from the profits of the sale of my unit? And I see that this amount is based on the gross profits. Surely the 10 percent should be calculated after all transactional expenses have been deducted?

Answer:
Such contributions, normally to a 'levy stabilisation fund' can only be recovered in terms of a specific condition which, in schemes where it applies, is normally reserved by the developer or made under the rules of the scheme and operates in favour of the body corporate.

The condition must be in a public document which is available for inspection by all persons who consider purchasing a unit and thus binding themselves to make this payment.

There is no requirement in law as to how the amount payable to the body corporate is to be calculated, i.e. whether transaction costs should be included or excluded. Whatever is provided in the condition will apply to all owners.

Excess payments for hot-water cylinders

Question:
I paid a R500 excess when the geyser burst; the managing agents then billed me for an additional excess of another R500. I believe I should have been told upfront that the excess was R1000 and not R500. In any event should the levy not cover this?

Answer:
Prescribed Management Rule 68(1) (vii) provides that an owner 'shall maintain the hot water installation which serves his section, or, where such installation serves more than one section, the owners concerned shall maintain such installation pro-rata, notwithstanding that such appliance is situated in part of the common property and is insured in terms of the policy taken out by the body corporate.'

This provision places the responsibility for maintenance on the owners served by a hot water cylinder and relieves the body corporate of the operational and financial responsibility in this regard. In theory, the owners concerned could each take out insurance to cover their risk in this regard, but this is not practical. Insurance for the cylinders comes as a standard feature of the body corporate's building insurance, so all owners pay via the levy.

Most insurance policies include an 'excess' or 'first payment' provision in terms of which the insured party must contribute a specified amount in the event of certain claims. When such a provision applies to repairs to or replacement of a hot water cylinder, in my view it is correct to recover the full excess amount from the owner concerned because the rules make him or her primarily responsible for that item. That is why the levy payable by all owners should not cover this expense.

There is no doubt that the managing agent should have given you the correct excess figure in the first place. But perhaps she or he was confused as to whether or not it should be shared 50:50 between the owner and the body corporate. In any event, you cannot rely on being initially under-debited to resist a claim by the body corporate for the balance of the amount.

Temporary structure on common property

Question:
An owner wishes to put up a marquee on the common property for three days and use it for his daughter's wedding. Must the owner get permission from every other owner or just a majority vote approval by the body corporate?

Answer:
This owner is asking for temporary 'exclusive use rights' to a portion of the common property and permission to have service providers and wedding guests use it.

All the common property is owned in undivided shares by all owners in the scheme, so owners may take the view that they should not be deprived of access to any part without their prior consent. But trustees have the power to let a portion of the common property to an owner for any period less than ten years. So if the rights of other owners will not be unreasonably affected, the owner is prepared to pay a reasonable rental and the trustees support the idea, then a short lease including appropriate conditions may be a sensible approach.