Sectional title developments are now geared to be the fastest growing sector in the South African new residential property world, but on such schemes there is always a crucial period when the developer hands over to the owners of the units, says Tony Clarke, MD of Rawson Properties.
Those owners are then required, by law, to form a body corporate and elect trustees. Once these legally elected trustees are in place, says Clarke, they should, as quickly as possible, elect a management committee and ensure they have legal counsel to advise them.
“Sectional title legislation and management are not learned overnight. It is almost always essential to call in legal experts to ensure the scheme performs in accordance with the law. In addition, the committee should appoint a competent property management company or managing agent to guide them and, if necessary, to act as arbitrator between the trustees and the body corporate members.”
Clarke says body corporate members are often busy and inclined to take no interest in serving on the management committee themselves. It frequently happens that they show little interest in who is elected to the committee but this, too, can lead to disaster. A committee with inexperienced people and without a good managing agent will cause a scheme to lose value rapidly.
“One of the trustee’s primary tasks is to draw up a budget, and members should see that they tackle it,” says Clarke. “This will determine the cost of maintenance of the building in the year ahead but should also allow for sums to be collected on every levy, to build reserve funds for major repairs and upgrades that will inevitably be needed down the line. If this fund is not set up onerous special levies are almost certain to become necessary within the first three to six years of the project.”
The new committee is also by law required to appoint a qualified, independent accountant/auditor for the scheme. This is necessary to audit the scheme’s financial accounts and to draw up the end of year annual report for submission to and debate at the AGM.
Another very important task of the new committee, says Clarke, should be to ensure the developers have made all the required capital contributions to the scheme and have met all their obligations, including those of dealing with the snag repair items.
“The developer is contracted to deal with these before ‘walking away’ from the scheme. However, it is common to find that, as the developer has not been contacted quickly, he has moved onto another project and is not available for these tasks.
“With the help of a competent engineer or building manager, the body corporate should therefore appoint someone to inspect the entire building within the first few weeks, to see that there are no structural faults and that the developer is handing over the project in good order.”
With a budget in place, says Clarke, a building can usually be maintained satisfactorily. However if the budget has been cut or not drawn up, within a period as short as three to six months the building can take on a shabby appearance. This, in turn, means it will then begin attracting ‘shabby’ fly-by-night occupants.
“All body corporate members should, therefore, try to be trustees on their schemes or, at the very least, keep a close watch on those who are acting in this position on their behalf,” says Clarke.
