2017 FinDok Round table discussion – 8 June 2017

  1. What exactly is Ombud Regulation?

-Providing an alternative, impartial and transparent service for the resolution of unresolved disputes in Community Schemes.

-The Community Schemes Ombud Service (CSOS) was established in terms of the Community Scheme Ombud Service Act, 2011 (Act 9 of 2011) to regulate the conduct of parties within the Community Schemes and to ensure their good governance.

-Take care not to take all matters to the Ombud, first follow the internal dispute resolution process.

-Take action and include the internal dispute settlement process in the Sales Contract, House Rules and Management Rules

-The following laws must be taken into consideration:

  • Consumer’s Act – Consumer Protection Act, No. 68 of 200.
  • Older Persons Act, Act 13 of 2006.
  • Rental Housing Amendment Act 35 of 2014.

-With rental tenants have their own Ombud – the rent tribunal. The tenant does not have to pay for the service as in the case of CSOS.

  1. What exactly is Fidelity Insurance?

-This is insurance against fraud. Should someone in charge obscure the resort/housing scheme’s fees, the insurance pays off after investigations and charges have been made.

-Insurance taken out by an employer against losses incurred through dishonesty by employees.

-Where insurance is taken out, strict regulations must be kept in accordance with the Sectional Title Act.

-It is suggested that an auditor conducts an internal audit on a three monthly basis in order to detect fraud in time.

  1. Who offers such insurance?

-Most insurance companies offer this type of insurance.

  1. Do you perhaps have this type of “group insurance”?

-At present the Interest Group for Retired Persons does not have such a type of group insurance.

  1. Who should be contacted at CSOS and what is the email address?

-Tel. no. 010593 0533

-Email address –

  1. With a Right of Occupation Scheme, who is responsible for submitting the documents to the CSOS? The developer or the Representative of the Management Association?

-The Residents Committee or Management Association Committee is non-persistent and therefore there is no continuity and it could easily be left to do so. There would be no liability insurance for the resident representative of the Management Association. This is the responsibility of the developer and/or the agent (Management) that acts on behalf of the developer.

-The Governing Body of a registered business with person(s) responsible for financial matters and legal aspects.

  1. Must the documents eg. Management and Conduct Rules are approved by the occupiers prior to submission?

-Sectional Title – Management Rules and Rules of Conduct must be registered with the Deeds Office but not life rights.

-The Management Rules of life rights is placed on file with the Deeds Office.

-The Management Rules must accompany the application when handed in at the CSOS.

  1. When should fees be paid to the Ombud?

-Quarterly – every three months.

  1. Is there already an account number in which the Ombud fees must be paid?

-Yes, the account number is available at CSOS.

  1. Should a dispute with an owner be referred to the Ombud, or can it be referred to an attorney?

-It is important that a dispute with an owner must first be handled with the developer and/or his agent first to attempt to find a solution.

-It is important that residents should know that there are costs involved when a dispute is referred to the Ombud. If the Ombud declares the dispute invalid, it can be dismissed with costs. For this reason, the resident must know what he is entering into before the dispute is being referred.

-An application can be made to the CSOS in respect of the following:

  • Financial issues
  • Governance issues
  • Meetings
  • Management services
  • Private areas and common areas
  • General and other issues

-The dispute can be registered with the Ombud. All complaints relating to “Community Schemes” can be reported.

-Alternative dispute resolution through conflict resolution and mediation can be done by the following persons:

  • Advocate Carla van Veenendal – contact number 082880 9363
  • Advocate Betsie Basson – contact number 082330 9586

-The decisions are binding.

  1. How can you pay the money to the Ombud if you have not received a registration document yet?

-The resort will have to make provision for the funds and the payment must be made as soon as the registration is finalized.

  1. Should arrears be referred to the Ombud, or can it be referred to an attorney for collection?

-Partial procedures for dealing with this matter are given in the Sectional Title Act.

  1. Who will do the 10 year maintenance plan of the resorts and who will update it?

-A Body Corporate is by definition a juristic person. The developer and/or his agent (the responsible person of the resort management) are responsible to update, maintain and implement the 10 year maintenance plan.

-It is not a responsibility that can be taken by a resident or resident representative.

-It is advisable to get an independent building engineer who will evaluate the buildings intensively and draw up a plan.

-NAMA’s web page can be searched for companies that can assist with the setting up of a maintenance plan.

-Life rights/rent – it is the responsibility of the owner to ensure that the maintenance plan is drawn up and placed in operation.

  1. There must be a budget for the maintenance and also a reserve fund. How is it determined from which fund maintenance is paid?

-The scheme must have a levy formula in place where it is indicated exactly what the levy is used for.

-Sectional Title and Life Rights – specified accounts must be sent out.

-There must be a reserve fund with the following sections:

  • General –for payments outside categories mentioned below.
  • A levy reserve fund.
  • Maintenance – long term (current and capital maintenance, as well as a development fund – building fund).
  • There should be a budget for general maintenance and property maintenance that forms part of the day-to-day management of the resort. The reserve fund only allows for great unforeseen maintenance.
  1. To vote in a meeting, your levies must be paid in full, what happens if your contribution to the Ombud has not been paid, can you still vote?

-The CSOS levy forms part of the normal levy and if it is not paid, therefore, no vote can be casted.

  1. May our Rules of Conduct require that only 2 people live in a two-bedroom house?

-Article 7 of Act 65 of 1988 remains valid until declared unconstitutional.

  1. Visitors must park in our public parking. The streets are very close and an older person can be driven over. Repeated circulars have been sent to residents regarding this. May the resort charge a fine when this behaviour rule is ignored by family and visitors?

-Before taking any steps, make sure that this rule that family and visitors must park at public parking is included in the House Rules/Rules of Conduct of the resort.

-If it is not recorded in the House Rules/Rules of Conduct, it is necessary that this request, that family and visitors must park on public parking, be circulated in a circular to residents and describe the reason for this rule. It is better to discuss and note this rule in a residential committee meeting before sending out the circular.

  1. At the entrance of the resort (electronic gate) there is a large notice in several languages indicating “right of admission reserved”. May the resort prohibit access where a resident’s family or friends cause problems?

-The following is unclear:

  • Does this visitor only threaten the Manager’s safety or the other residents and other employees of the resort as well?
  • Have similar incidents to the specific visitor happened before?
  • The relationship between the resident and the Manager is also unknown?

-It is essential that the resort has the following in place:

  • The House Rules/Rules of Conduct of the resort must make it clear that no resident, visitor or relative may disturb the harmony of any fellow resident and that the resident is responsible for the harmony of the resort at all times.
  • If there is no House Rule/Rule of Conduct of this kind, it is necessary to correct it. It is essential that this request, that residents, family and visitors do not disturb the harmony of the resort, should be written in the House Rules/Rules of Conduct. It can only be mentioned and discussed at a residents committee meeting. This is done without highlighting a particular incident.
  • A circular indicating this House Rule/Rule of Conduct can be sent to residents. This happens without highlighting a particular incident.
  • If all of the above is in place, a letter can be addressed to the specific resident referring to the House Rules/Rules of Conduct and that the particular visitor may be refused entry in the future.
  • If the resident does not respond positively to the letter, the visitor may be refused entry.
  1. In terms of paragraph 20 of the Older Persons Act, Act 13 of 2006, and a residents committee must be elected to protect the interests of residents (not necessarily owners) in the retirement village. We at Zambezi Retirement Village have more than 520 residents. We also have a Care Centre on the premises that forms part of the whole resort – all properties are sold in terms of the Sectional Title Act. It is still unclear whether the whole resort will be registered as a residential facility, or just the Care Centre. In our opinion, it will be the whole resort. Article 17 of the abovementioned Act stipulates inter alia that the election of the residents committee is approved by a majority of the residents. We will not be able to accommodate that number of people in the resort. The article in question does not make provision, such as the Sectional Title Act, that the meeting be deferred if there is no quorum present. In our view, it is therefore unlikely that a resident committee may be elected.

-Currently, only the Care Centre is registered.

-If services are rendered to the wider community, the services must be registered.

-The resort as a residential facility is not registered.

-The intention of the residents committee is to give residents of the Care Centre to opportunity to participate in the management of the Care Centre.

-Residents are not necessarily able to exercise their rights so members from outside qualify to be appointed.

  1. With a scheme to be converted from the Right of Occupation to Sectional Titles as some future date, which legislation is applicable in respect of the submission documents?

-Obtain legal aid.

  1. If an ordinary majority decision is taken at an Annual General Meeting, must it be decided by ballot?

-The arrangement is determined by the Constitution. The use of ballot papers will leave a clear paper trial for future enquiries.

  1. Is it possible for a developer to market and sell a retirement village as a Sectional Title Scheme, register it as a Sectional Title Scheme without establishing the scheme after 60 days from transfer of first property by a Governing Body to and then on its own, convert it into a Section 21 Company (NPO) managed by a HEV to take over all the duties of a Governing Body? No such resolution was ever presented to the owners. Currently, the Board is managed by a Board of Directors instead of a Board of Trustees. The implication hereof is that the new Ombud Act (CSOS) requires a double levy of both schemes. Which route should be followed to correct the matter?

-Obtain legal aid.

  1. It is stated that there will be a limit on the number of proxies held per person and that a person will not be able to be a proxy for more than two members. We are not certain whether this information is correct. If this is in fact correct where is this specified in the new CSOS and/or Sectional Title Act. It is stated that a person receiving a proxy does not need to be a member, but must not be the managing agent or an employee of the managing agent of the Body Corporate. However, what is the situation when a registered owner/member (who is also a trustee of the Body Corporate) has been appointed Manager and therefore is an employee of the Body Corporate. Is this person entitled to accept a proxy?

-The new Sectional Titles Management Act provides clear guidelines regarding this matter.

  1. Resorts are required by law to raise funds in case of unforeseen expenses that take place. At present tax is levied on the interest income of these funds. Is this correct?

-Yes, unless you have a PBO.

  1. We would like to receive more information about the residents’ committee and the registration of the residential facility. It was our question, which was discussed at the meeting, and Syd Eckley indicated that a retirement village cannot be registered as such – only the frail care and the assisted living housing units that have been merged for this purpose – and that there has now been a dispute over this. We would like to get the results of this dispute under review as we consider the same route. We could not get a meaningful response from the Department of Social Development.

-We will find out if there is an outcome on the dispute.

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