GOVERNANCE
STSMA
CAME INTO OPERATION
7TH OCTOBER 2016 - ACT NO. 8 OF 2011
THE SECTIONAL TITLE SCHEMES
MANAGEMENT ACT, ACT
NO. 8 OF 2011 (STSMA) HAS
INTRODUCED A NUMBER OF NEW
REQUIREMENTS INTO SECTIONAL
TITLE MANAGEMENT, WITH
SERIOUS FINANCIAL IMPACT ON
MOST SECTIONAL TITLE SCHEMES.
THESE CAN BE SUMMARISED AS
FOLLOWS: To fund this maintenance, the BC must open found one PQ that required a commitment
a separate maintenance bank account with the from over 40 of the owners to either attend
25 percent minimum reserve mentioned above. or appoint a proxy.
• A year plan income, which is then paid monthly
10-year maintenance plan and the
funding of this plan.
•
A minimum reserve that must be 25
percent of the previous year’s ordinary levy
If the BC does not have all of the previous
year’s levy income (which very few do), they
have to put into the budget, in the 10-year
line item of expenditure, the full amount that
is expected to be spent in the year according
to the plan. In most instances, this item is
raised as a special levy payable over 12
months and not subject to an increase like
the ordinary levy. This clearly identifies the 10-
into the maintenance reserve bank account.
The payment for maintenance items on the
plan is then drawn from this fund.
annual income. Other amendments that are also
worth noting:
Although some schemes budget for Trustees
maintenance, this 10-year plan is now a
legal requirement and its funding must Rule 8 no longer refers to indemnity for a
appear in the annual budget as a separate trustee unless the action is mala fide or
expenditure line item. There will be the grossly negligent. It states that the trustee
normal operational maintenance budget must be indemnified as a result of any official
and then the 10-year plan maintenance act that is ‘not in breach of the trustee’s
budget. The way in which this plan must fiduciary obligations’. For the trustee’s fiduciary
be drawn up is detailed in its requirements obligation, we need to refer to Section 8 of
in the STSMA. the Act, which deals with the fiduciary capacity.
This includes Rule 22, which requires that
a bodies corporate (BC) must draw up
a 10-year maintenance plan of expected
maintenance and repair, the present
condition or state of repair of those
items, the time when those items will need
maintenance, and the estimated cost of the
repair as well as the expected lifespan and
any other information.
This plan will have to include major capital
items such as wiring, lighting, electrical
systems, plumbing, drainage, storm-water
systems, lifts, roofing, painting, waterproofing
and roadways, among others.
Here, the law says that trustees must ‘act
honestly and in good faith, and in addition, the
CSOS Regulation 14(e) requires the trustees
to “exercise due diligence in relation to any
business”.
Quorum At An AGM
A quorum must now be calculated on value
of votes (Q) which, in schemes over four units,
must be 33.3 percent. This is proving quite
difficult in larger schemes, which often have
smaller units with small PQs. Previously only
This is made more difficult with the
requirement that:
Proxy Vote
No one may hold the vote of more than
two members. This means that if “A” owns
four sections and “B” owns two sections,
one person may hold the proxy for “A”
and “B” and would exercise six proxy votes
for two members.
Attendance By Electronic Means
This is proving very popular, especially in
trustee meetings. The meeting must be able
to confirm that it is the trustee to whom
they are speaking, and everyone present
must be able to hear the trustee and they
must be able to hear the entire meeting. To
date, trustee meetings using Skype and on
speaker phone through a conference phone
arrangement have been successfully held.
CSOS
The arbitration clause, which was included
in the previous STA for dispute resolution,
has disappeared and an Ombud has
been appointed and is governed by the
Community Schemes Ombud Service Act.
Owners with a dispute may now approach
the Ombud, for a very reasonable cost, and
on completion of a prescribed form. These
are just some of the amendments contained
in the STSMA, and trustees are urged to
attend various training sessions in order to
learn more about this new legislation which
is having a huge impact on all sectional
20 owners were required for a quorum in a title owners.
scheme of more than 50 units and we have Barbara Shingler
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