Important new sectional title and community schemes laws in force


An alternate dispute resolution process will now be provided by the CSOS. Anyone party to or “affected materially” by a dispute (that would include schemes themselves, unit owners, tenants, residents, managers, administrators, service providers etc.) can apply to the Community Schemes Ombud to adjudicate a very wide range of disputes at minimal cost - R50 per application, R100 per adjudication, R8 for a document copy. Legal representation will be allowed only by agreement or as decided by the adjudicator.

All Schemes will - 90 days from 7 October - have to pay CSOS a levy, and recover it from every unit based on that unit’s monthly levy, ranging from R0 for a levy of R500 p.m. or less up to R40 p.m. for a levy of R2,500 p.m. or more. CSOS has a downloadable levy calculator on its website.

All Schemes “executives” (trustees, directors and the like) acquire various duties and fiduciary obligations, and schemes must take out fidelity insurance, must register with CSOS on form CS1 (within 30 days of 7 October or incorporation) and must lodge annual returns and governance documentation with CSOS.

NEW RESERVE FUND AND NEW MANAGEMENT REQUIREMENTS FOR SECTIONAL TITLE SCHEMES

Amongst the new management responsibilities and liabilities now placed on bodies corporate and trustees, one that has garnered a lot of media attention is a requirement to prepare a 10 year plan for maintenance, repair and replacement of capital items, coupled with a new obligation to establish and maintain a “reserve fund” sufficient to cover future maintenance and repair costs.

A minimum level for this reserve fund is set at 25% of the previous financial year’s “administrative fund” (the fund for operating costs) levies. If your scheme has relied in the past on special levies rather than a reserve fund to finance major maintenance and repairs, your levies are probably going to increase significantly - for example if your reserves are below the 25%, the minimum contribution to the reserve fund must be 15% of the new administrative fund levies.

Web site: Read full article on www.csos.org.z a



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