Levies and trustees are at the centre of the latest question posed to our panel of experts.
A lady, who recently bougth a flat, wants to know whether it is normal, or legal, for the levy to increase by 35%.
She is also concerned that some trustees are abusing their powers and asks if owners, who are in arrears, are allowed to act as trustees and, lastly, whether trustees are allowed to serve for consecutive terms.
Lucille Geldenhuys
Lucille Geldenhuys from Lucille Geldenhuys Attorneys in Stellenbosch says Section 35 of the Sectional Titles Act 95 of 1986 provides that when any person other than the developer becomes an owner of a unit, a body corporate is established.
“The developer, for as long as he or she owns units, and the other owners are members of the scheme’s body corporate.”
The act further provides that every person who becomes an owner thereafter, will be a member of the body corporate, according to Geldenhuys.
“The standard management rules state that a minimum of two trustees will be elected at the first annual general meeting (AGM) of the body corporate. These trustees will hold office until the next meeting and will be eligible for re-election if nominated.”
Geldenhuys says these trustees stand in a fiduciary relationship to the body corporate and their duty is to perform and exercise the functions and powers thereof, as set out in the act and the rules of the scheme.
“A trustee must exercise his or her powers to manage or represent the body corporate in the interest and for the benefit of the body corporate.”
Geldenhuys says a trustee may not act without, or exceed, the powers granted by the act, the rules or the owners, and must avoid material conflict between his or her interests and those of the body corporate.
Schalk van der Merwe
Schalk van der Merwe from Rawson Properties Helderberg says the management rules do not prohibit a trustee who is in arrears to be re-elected, if so nominated.
“The rules do, however, prohibit an owner from voting at an AGM if in arrears, except where a special or unanimous resolution is required.”
The reader has the right to nominate owners or their spouses (or other parties, subject to certain conditions), other than the current trustees, to be elected as the new trustees at the next AGM, says Van der Merwe.
“I would advise her to familiarise herself with the provisions of the act and the management rules so that she can ascertain what her and the other owners’ powers are with regard to decisions taken in matters relating to the management of the scheme.”
Van der Merwe says the trustees do not decide by themselves what the increase in the normal monthly levy will be.
“The trustees prepare a budget that is approved, with or without amendments, by the body corporate at every AGM. The levy, meaning each owner’s contribution towards the budget, will then be calculated in accordance with the approved budget.”
If the scheme’s financial position is strong, it may happen that no increase is necessary, says Van der Merwe.
“If the financial requirements have increased, however, it may necessitate an increase that is higher than would normally be the case. What would be regarded as normal, would depend on the particular scheme and its financial requirements for the coming year.”
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