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

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Duties of Trustees

Section 3, 4 and 5 of the Act deals with the functions and powers of the Body Corporate and Section 7 explains that these functions and powers must be performed by the Trustees.

Section 3 – Funtions of the Body Corporate

  • To establish an administrative fund to cover the estimated annual operating costs :

The fund must be reasonably sufficient to cover the following:

  • Repair, maintenance and administration of the common property – this includes reactionary maintenance
  • The payment of the Council accounts
  • The payment of insurance premiums
  • Costs for the discharge of any duty or other obligation of the BC
  • To establish a reserve fund to reasonably cover the cost of future maintenance and repair of the common property:

This is a new concept introduced by the STSM Act since 7 October 2016.

The fund must be used for planned maintenance and is envisioned to prevent special levies.

  • To require the owners to pay contributions to these funds:

What we are doing is to advise our BC’s to show the contributions to these funds separately i.e. to have an admin fund levy and a reserve fund levy.  They still need to be added together to constitute the monthly levy but they are shown separately.

  • To require the Developer – who has a Section 25 right reserved to extend the scheme – to make the necessary contributions to the funds:
  • To determine the amounts for the contributions
  • To raise the contributions
  • To open and operate bank accounts for the funds
  • To insure the building(s) against all risks as prescribed
  • To insure against such risks as the BC may determine by special resolution
  • Then to quote from the STSM Act – “subject to section 17 and to the rights of the holder of any sectional mortgage bond, forthwith to apply any insurance money received by it in respect of damage to the building, in rebuilding and reinstating the building or buildings in so far as this may be effected”.

Section 17 deals with instances where the building(s) are deemed to be destroyed.

  • To pay the insurance premiums
  • To maintain the common property and to “keep it in a state of good and serviceable repair”
  • To comply with any notice or order of any competent authority requiring repairs or work to be done to the land or buildings
  • When receiving a reasonable request; to provide the names and addresses of the Trustees or of the members of the BC
  • To notify the following of the domicilium / service address of the BC:
    • The Chief Ombud
    • The local Council
    • The Registrar of Deeds
  • To ensure compliance with any law relating to the common property or to any improvement of land comprised in the common property:
  • To maintain any plant, machinery, fixtures and fittings used in connection with the common property and sections and to keep them in a state of good and serviceable repair
  • Subject to what falls under the Council’s obligations to maintain and repair including renewal where reasonably necessary, pipes, wires, cables and ducts existing on the land
  • If any owner or bondholder or any person authorised by the owner or bondholder requests a copy of the insurance policy and/or proof that the insurance premiums have been paid – it must be given to them

Section 4 – Powers of the Body Corporate

  • To appoint such agents and employees as they see fit
  • By special resolution decide to purchase / acquire / take transfer / mortgage / sell / give transfer / hire or let units – when essential for the proper fulfilment of its duties:
  • To purchase / hire / acquire movable property:
    • For the use of owners
    • For their enjoyment
    • For their protection
    • For the protection of the common property
    • In connection with the enjoyment of the common property
  • Where practical to establish and maintain lawns, gardens and recreational facilities on the common property
  • To pass a special resolution to borrow money – if it is required in the performance of the functions or the exercise of the powers of the BC
  • If they have borrowed money they have the power to secure the repayment of the loan and interest on it by mortgaging any property owned by the BC or by a notarial bond over future levies
  • To invest money ito the administrative fund:

The omission of reference to the reserve fund must have been an error, but it is dealt with in PMR 21 

  • To enter into an agreement with an owner for the provision of amenities or services, including the power to rent a portion of the common property to any owner / occupier by way of a lease (other than a lease as per Section 5(1)(a)) And you need a special resolution for the lease
  • To do all things reasonably necessary for the enforcement of the rules and for the management and administration of the common property 

It is to be noted that even though Section 4 of the STSM does not specifically mention the power of the BC to enter into contracts with the Council for the supply of services this is covered by Section 4(1)(i) and PMR 21(3)(e).

Section 5 – additional powers of the Body Corporate

  • May after passing a unanimous resolution and with the written permission from any Section 25 right holder do the following:
    • Alienate any part of the common property
    • Enter into a long term lease or a lease with a person / company other than an owner / occupier
  • May – subject to Section 17(1) of the STA – deal with such common property or part thereof in terms of the resolution.
  • May execute any deed required for this purpose (including any deed required under the STA)
  • May – with the written consent of ALL owners as well as ALL bondholders – alienate, exercise or cede a right of extension of the scheme (by the addition of sections)
  • May; with a unanimous resolution; extend the period of the Section 25 right that was reserved
  • May – with the written consent of all owners – purchase land to extend the common property. Subject to Section 5(2)
  • May – by unanimous resolution – give owners exclusive use rights in terms of the plans
  • May – by special resolution – cancel an exclusive use right that was created in terms of the plans
  • May – by special resolution – create servitudes
  • Must – if approved by special resolution – approve the extension of a section
  • May generally exercise any power and perform any function conferred or imposed on the body corporate in terms of this Act or the Sectional Titles Act.

For some reason another power of the BC is hidden in PMR 21 – in between financial powers – stating that the BC may (by written resolution of the Trustees) decide to join organisations or subscribe to services to further its purpose.  This was not in the previous Act (before 7 October 2016).

The CSOS Act also lists duties of Scheme Executives – this includes the Trustees of a Sectional Scheme.

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