All Our Trustees Have Resigned. What Now?
What happens if all the trustees of a sectional title scheme resign? Who is then in control of the management, and who is entitled to continue exercising the function and powers of the body corporate, which is entrusted to the trustees by virtue of the Sectional Title Schemes Management Act 8 of 2011 (STSMA)? The answer lies in the question, namely the body corporate. Prof CG Van der Merwe describes the body corporate as consisting of the aggregate of sectional owners, and is the central administrative body provided by the legislature for the management of the scheme. Upon the date upon which any other person other than the developer becomes an owner, there is deemed to be established for that scheme, a body corporate. The body corporate is subject to the provisions of the STSMA, responsible for the enforcement of the rules and for the control administration and management of the common property for the benefit of all the owners. A body corporate continues to exist until such time as its affairs are wound up and it is dissolved pursuant to an order to that effect by the High Court. No sectional owner can revoke his membership in the body corporate, and they remain a member until they cease to be an owner of a unit in the scheme. It is therefore obvious that the resignation of the trustees will not bring an end to the body corporate. There are a few options available to the owners of units to ensure the continued functioning of the body corporate, now that the trustees have resigned from office, namely: Call a special general meeting in order to appoint replacement trustees. In order to convene a meeting, the owners entitled to at least 25% of the total of the quota of all sections, can convene the meeting by giving 14 days’ notice to all the owners. The notice must include the motion for discussion, which must be included in the agenda for the meeting. Should all the members waive their right to the meeting and consent to the resolution, then the rules provide that the meeting does not have to be held and that the resolution will be so passed. If not, the meeting must be held and the resolution must be voted upon. The appointments will not require a special or unanimous resolution, a simple majority will suffice. The replacement trustees will serve until the next annual general meeting. The replacement trustees then continue as the trustees and must perform the duties and functions entrusted to them; or The body corporate can, by way of a special resolution, appoint an executive managing agent to perform the functions and exercise the powers that would otherwise have been performed and exercised by the trustees. Alternatively, the owners entitled to 25% of the total quota of all the sections can apply to the Community Schemes Ombud Service for the appointment of an executive managing agent. The Act provides that: the executive managing agent is subject to all the duties and obligations of a trustee under the Act and the rules of the scheme; is obliged to manage the scheme with the required professional level of skill and care; is liable for any loss suffered by the body corporate as a result of not applying such skill and care; has a fiduciary obligation to every member of the body corporate; must arrange for an inspection of the common property at least every six months and must report at least every four months to every member of the body corporate on the administration of the scheme. The Act furthermore provides the extent of the details to be included in the reports as referred to above. The list is extensive and includes amongst other things: proposed repairs and maintenance of the common property and assets of the body corporate; any matter relevant to the condition of the common property; the balance of the administrative and reserve funds of the body corporate and a reconciliation statement of the funds; for the period of appointment the expenses of the body corporate, including repair maintenance and replacement costs and a brief description of the date and nature of all decisions made by the executive managing agent. The only issue detracting from the appointment of an executive managing agent will be the cost involved. The executive managing agent will charge a fee which will usually be higher than that of managing agents due to the extent of the work as a result of any ineffectiveness or maladministration of the existing trustees; or Finally and possibly the most intrusive and costly, in that it involves a court application, is the appointment of an administrator. If there is evidence of serious financial or administrative mismanagement of the body corporate and if there is a reasonable possibility that if placed under administration it will be able to meet its obligations and be managed in accordance with the Act, the Magistrates Court will appoint an administrator for a fixed period. An application can be made by the body corporate, a local municipality, a judgment creditor, any owner or a person having a registered real right in or over a unit for the appointment of a suitably qualified and independent person to serve as an administrator. The administrator has, to the exclusion of the body corporate, such powers and duties as the Magistrates Court direct and must exercise these powers to address the body corporate’s management problems as soon as is reasonably possible. They must convene and preside at meetings and lodge with the Ombud copies of notices and minutes of meetings and written reports on the administration process every three months or at such intervals as the court may determine. The court can on application by the administrator or those parties referred to hereinbefore, remove, replace, extend the term or amend the terms of appointment of the administrator and make any order for payment of costs. Prof CG van der Merwe states that
Compliance certificates required when selling a property
There are five compliance certificates that the Seller is required to obtain at his/her own cost before the transfer of the property takes place. The following are the necessary certificates: Electrical Compliance Certificate The Electrical Installation Regulations under Section 43 of the Occupational Health and Safety Act, sets out the requirements for obtaining a valid electrical compliance certificate. Regulation 7 (1) states that “every user or lessor of an electrical installation, as the case may be, shall have a valid certificate of compliance for that installation”. Regulation 9(1) states “no person other than a registered person may issue a certificate of compliance”. The registered person may only issue the certificate of compliance after completing an inspection and a test. The test report must accompany the certificate of compliance. The certificate of compliance may not be older than 2 years. Hence, when the Seller is selling and has a certificate older than 2 years in his/her possession, he/she is obliged to obtain a new certificate to hand over to the Purchaser. In terms of Regulation 15, it is an offence should a person fail to comply. The penalty is a fine or imprisonment should the person be found guilty of the contravention. Electrical Fence Certificate As of the 1st of October 2012, the issuance of an Electrical Fence Compliance Certificate came into effect. This certificate is to be issued in terms of Regulation 12(4) of the Electrical Machinery Regulations, under the OHS ACT of 1993. All property owners that have an electrical fence must, in terms of this Regulation, obtain a compliance certificate when selling their property and only a registered Electric Fence System Installer can issue a property owner with the certificate of compliance. The Electrical Fence certificate is valid for up to 2 years from the date of issue. It must be noted that should the Seller have an electric fence, the Electrical Compliance Certificate discussed above will not include the electrical fence, as it will have its own certificate of compliance. Water Compliance Certificate In 2011, the City of Cape Town introduced a local water by-law. In terms of Section 14 of the Water By-Law, “the Seller must, before transfer of a property, submit a certificate of compliance from an accredited plumber certifying that: The water installation conforms to the National Building Regulations and this By-Law There are no defects The water meter registers There is no discharge of stormwater into the sewer system” A qualified, registered plumber may issue the certificate of compliance and this certificate must be issued every time the property is transferred. The water installation certificate of compliance is not a plumbing certificate as it is limited to the By-Law and is not as comprehensive as a plumbing certificate. Beetle-Free Certificate This compliance certificate is not a requirement by law but has become a practice in the sale of property, particularly in coastal provinces, where the wood borer beetle is commonly found. Between the 1940s and 1960s, there was an infestation of the beetle, which compromised the structural integrity of buildings and homes, thus the beetle compliance certificate was introduced to protect the Purchaser. The financial institutions that grant the home loan bond insist on this compliance certificate to protect their asset. The beetle certificate is valid for up to three months from the date of issue. It should be noted that a beetle compliance certificate is not a pest control certificate. Gas Certificate As of the 1st of October 2009, Regulation 17(3) of the Pressure Equipment under the Occupational Health and Safety Act, came into effect. This Regulation states that “an authorised person or an approved inspection authority shall issue Certificate of Conformity after completion of a gas installation, modification, alteration or change of user”. The Certificate of Conformity will be issued by the South African Qualification and Certification Committee Gas, and a registered gas practitioner for the installation, repair, modification, or maintenance. The nominated Conveyancer attending to the transfer of the property will ensure that the Seller obtains the above-mentioned certificates. The Purchaser should request the original certificates for their records and must scrutinise these certificates to ensure that an accredited service provider provided the certificates and that the certificates are valid according to the Regulations. The Purchaser should further ensure that the Seller has complied with all the required certificates by inspecting the property to ensure that for example, should there be a gas appliance, a gas certificate is obtained. These certificates afford comfort to the Purchaser that the property he/she is purchasing conforms to Building Standard norms and regulations set. Reference List: Occupational Health and Safety Act 1993, Electrical Installation Regulations Occupational Health and Safety Act 1993, Electrical Machinery Regulations City of Cape Town, Water By-Law, 2010, Promulgated 18 February 2011 Occupational Health and Safety Act 1993, Pressure Equipment Regulations Written by MEERUSHINI GOVENDER This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)