My colleague, Mark Friebus, wrote an article in March 2023 titled “5 Rights of a Sectional Title Owner”.
We have been asked to write an article on Owners Rights vs. Trustees Rights. With March being the start of the new fiscal year for many schemes, I thought it a good time to tackle this topic.
Trustees Rights:
The use of the word “right” is used lightly as they are powers that are bestowed upon the individuals at the Annual General Meeting (AGM). These are set out in Sections 3, 4 and 5 of the Sectional Titles Schemes Management Act, 2011 (STSM Act) and the Prescribed Management Rules (PMR).
Raise Special Contributions (for emergency expense items outside of budget)
Approve and sign the Annual Financial Statements which are presented to the members at the AGM for consideration
Appoint service providers and employees
Acquire, take transfer of, mortgage, sell, give transfer of or let units *
Purchase, hire or otherwise acquire movable property for the use of owners for their protection or in connection with the enjoyment of the common property
Enter into an agreement with any owner or occupier for the provision of amenities or services by the scheme, including the right to let a portion of the common property to any owner or occupier by means of a short-term lease *
Establish and maintain suitable lawns, gardens, and recreation facilities on the common property
Invest any moneys (registered financial institutions only)
Do all things reasonably necessary for the enforcement of the rules and for the management and administration of the common property
Alienate common property or any part thereof or let the common property or any part thereof under a lease *
Alienate or cede a right of extension of the scheme by the addition of sections *
Enter into a notarial agreement to extend the period stipulated in the future development right of the scheme *
Purchase land to extend the common property *
Request the delineation and cession of registered exclusive use rights to particular owners *
Enter into a notarial deed of cancellation of a registered exclusive use right *
Execute on behalf of the owners a servitude or a restrictive agreement burdening the land shown on the relevant sectional plan and may accept on their behalf a servitude or restrictive agreement benefiting such land *
Approve the extension of boundaries or floor area of a section *
* Some of the powers listed above would first require a resolution/consent from the owners and/or bondholders.
Owners’ Rights:
Owners may impose restrictions on the functions and powers of the trustees and provide direction to the Trustees at a general meeting of the owners in terms of Section 7(1) of the STSM Act and PMR 9(b)
Owners approve the Administration and Maintenance Reserve budgets at the AGM. PMR 9(c) compels the trustees to apply the body corporate’s funds in accordance with the approved budgets
Owners nominate and elect trustees at every AGM
Owners determine the number of trustees (scheme with more than 4 primary sections)
Owners decide on the appointment of auditors at every AGM
Owners decide on the Insurance Replacement Values of the properties at every AGM
Owners have the right various governance documentation per PMR 27
Owners have the right to speak at a general meeting
It is crucial for owners when nominating and electing trustees, to always choose individuals who will act in the best interests of the scheme and not in their own personal interests.