Property Management, Property Rentals and Property Financial Services in South Africa

CSOS decision highlights the need for care when changing rules

The recent ruling by the Community Schemes Ombud Service (CSOS) on the dispute at the Blyde Riverwalk estate in Tshwane really underlines the need for trustees and developers who wish to change the management or conduct rules of sectional title schemes to do so in a proper and inclusive way.

That’s the word from Andrew Schaefer, MD of leading property management company Trafalgar, who says: “The Sectional Titles Schemes Management Act (STSMA) Regulations contain prescribed conduct rules that apply to all sectional title schemes, and although these can be amended to suit the circumstances of individual schemes, the changes will not be enforceable unless the trustees and/ or developers follow the correct process.

Community Schemes Ombud Service

“Proposed changes need to be presented to the members of the body corporate at a special general meeting that can only begin if more than 33% of the registered members are present in person or by proxy. And the changes can only be approved if 75% of the votes, in number and value, are in favour.

“After that, the changes or new rules must still be submitted to the CSOS for review and approval, and the CSOS must issue a certificate of approval before they can be applied and enforced.”

In the case of estates run by Homeowners Associations (HOAs), he says, the basic conduct rules for residents are usually contained in the Constitution or Memorandum of Incorporation (MOI) of the HOA, which will usually also stipulate who can make or change rules.

“And in contrast to sectional title schemes, the directors of HOAs may be able change rules or make new ones without taking a vote among owners. Nevertheless, any changes to governance documents like an MOI or HOA constitution still need to be filed with CSOS.”

Meanwhile, says Schaefer, it is worth noting that there were two main reasons for the the Blyde Riverwalk decision by the CSOS adjudicator, which resulted in the trustees and developers having to scrap a rule change they had tried to make in order to prohibit short-term letting.

“The first reason was that the special general meeting required to amend the scheme’s rules was not correctly convened, and that only 53% of votes were in favour of the change anyway.
“The second was that the proposed change appeared to be ‘unreasonable’ in that it sought to stop owners from being able to let out their units on a short-term basis – when the ability to do this was specifically what had persuaded many of them to buy into the development in the first place.”

This is in line, he notes, with the notice issued by CSOS last year in which it stated that it will absolutely not approve any rule changes that are not compliant with legislation such as the STSMA, the Companies Act and the Consumer Protection Act – or any rule changes that discriminate against certain owners or interfere with individual owners’ property rights in terms of the national Constitution.

“This case is thus a good reminder to all sectional title trustees and HOA directors to ensure that they follow the correct procedures and consider the relevant legislation if they ever want to amend or add to the conduct rules of their schemes.

“At the same time, it is a reminder to anyone buying into such schemes to always check the existing conduct rules first, and decide before they sign an offer to purchase whether these rules are in line with their own lifestyle preferences and their reasons for buying the property.”

*For more information on the process for successfully changing conduct rules, see
https://www.trafalgar.co.za/how-to-create-st-conduct-rules-that-really-work/
and
https://www.trafalgar.co.za/webinars/

Issued by the Trafalgar Property Group
For more information contact
Andrew Schaefer on 011 214 5200

Or visit www.trafalgar.co.za

About Trafalgar
Trafalgar currently has more than 86 000 residential properties worth more than R80-billion under management in more than 1400 community housing schemes around SA.

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