Know Your Body Corporate Rules

Although buying into a sectional title scheme offers a certain level of security to a vast majority of safety-conscious South Africans, problems can arise if those buying into this type of investment do not read the fine print of the body corporate rules and ensure that the scheme is in sound financial order. We address this issue more fully in our article entitled “what to know before buying into a Sectional Title Scheme”

There are many reasons that this type of scheme has become so popular amongst South Africans, one of them being that it offers entry-level investment buying prices with a far reduced risk factor as many costs are shared between the owners in proportion to their participation quota.

Generally speaking, the costs of maintaining the units are also lowered because exterior maintenance work is budgeted for and future expensive repairs are decided and planned for well in advance.

However, there are rules governing these schemes and anyone considering investing needs to ask an agent for a copy of the Body Corporate rules and financials before signing any sales agreement. Any prospective Sectional Title purchaser should also be acquainted with the laws and rules as contained in the Sectional Titles Act.

These rules establish what the current owners find acceptable within the confines of the scheme and lay out exactly what owners can and can’t do. One should also bear in mind that it is a legal requirement to attach the rules to a valid lease agreement when renting out a Sectional Title unit to tenants. These rules are not made on a whim and the regulations applicable to the scheme must be registered in the Deeds Office in order for the rules to be enforceable.

One of the more contentious issues revolves around pet ownership. Buyers should never assume that just because they have seen a small dog wandering around the complex that this means that the trustees allow unit owners to keep pets in the complex. It is always advisable for homeowners to confirm in writing with the body corporate that they do indeed allow pets within the premises.

Anyone considering buying into a scheme should also request to see the financial statements of the body corporate as this will give a clear indication of the liquidity of the scheme. It is essential to ensure that there is enough money in the kitty to take care of not only the day-to-day expenses, but also any planned or unplanned maintenance costs. It is also important to ensure that the debtors of the Body Corporate are being adequately dealt with.

Special levies are also very often a bone of contention. Sellers often fail to disclose that a special levy has been introduced to cover additional expenses. With this in mind, it may also be a good idea to ask to see the minutes of any meetings held by the trustees in the preceding 12 months as these can often alert potential homeowners to problems that the complex is currently experiencing.

As with any property investment buyers need to do their homework thoroughly. For those investing in a sectional title scheme, the body corporate rules are the best place to start.