Sectional Title Scheme Rules and the New Regulations

The Law in perspective

With the proclamation of the Sectional Title Schemes Management Regulations in Government notice 1231 of 2016 (7 October 2016), Schemes who had rules drafted in terms of the Sectional Titles Act, 1986 (Act No. 95 of 1986), no longer need to enforce these “old” rules. Instead, Scheme Rules, in terms of both Management and Conduct Rules are now prescribed in Annexure 1 and 2 of the regulations respectively.

The Act does however provide for the adaptation of the Prescribed Rules in one of the following ways:

  • Substitution,
  • Amendment, or
  • Repeal

The process is however also prescribed. Both sets of rules can according to Section 10(2) of the Act, be replaced by:

  1. In the case of the Prescribed Management Rules:
    1. By the developer, or
    2. By Unanimous resolution of the Body Corporate.
  2. In the case of the Prescribed Conduct Rules:
    1. By the developer, or
    2. By Special Resolution of the Body Corporate.

The chances are slim that the developer of a Scheme prior to the STSM Act would still be “developing” the Scheme, unless a development right is still in place. It is thus only neccesary to look at items 1.2, and 2.2 above in a bit more detail.

Unanimous Resolution vs. Specials Resolution

An Unanimous Resolution means

means a resolution—

a) passed unanimously by all the members of the body corporate at a meeting at which—
i) at least 80% calculated both in value and in number, of the votes of all the members of a body corporate are present or represented; and
ii) all the members who cast their votes do so in favour of the resolution; or

b) agreed to in writing by all the members of the body corporate.

This means one of two routes can be followed in adopting an Unanimous Resolution.

Votes in favour of the “Rules” must be by at least 80% of the members present at a meeting held for this purposes, or

100% of the members agree in writing to accept the “rules”.

Interestingly, in calculating the “votes” both the value and number must be 80% or more.

A Special Resolution

means a resolution—

a) passed by at least 75% calculated both in value and in number, of the votes of the members of a body corporate who are represented at a general meeting; or
b) agreed to in writing by members of a body corporate holding at least 75% calculated both in value and in number, of all the votes.

The number of members agreeing to altered management rules are indicatively higher (80%) vs the 75% for amendments to the Conduct Rules. The reasoning behind this is the financial impact and governance risk of changing the management rules are greater than changing the Conduct Rules.

It is important to note that any amendment, substitution or repeal of a Prescribed Rule may not be irreconcilable with the prescribed rules, the Act, the Community Schemes Ombud Service Act (Act 9 of 2011), the South African Constitution or any other law or bylaw applicable.


When do these Amended Rules become effective?

Adapted Scheme Rules becomes effective after receipt of a certificate issued by the Ombud, which may be refused if the proposed rules do not meet the requirement above, or is inpropriate or unreasonable for the scheme concerned.

About the Prescribed Rules

Although the Prescribed Rules are part and parcel of the regulations, they are not enforceable by the Body Corporate of a new scheme on any person until such time as it has been adopted by the developer of the Scheme and a certificate to confirm the adoption of the Prescribed Rules, have been issued by the Community Schemes Ombud. In fact, without the Certificate, the Body Corporate in itself, may not exist.

 

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