STSM
Sectional Titles Schemes Management
What is the STSM?
The Sectional Titles Schemes Management Act 8 of 2011 is a South African statute that governs the management and administration of sectional title schemes, which are common forms of shared property ownership. It provides a comprehensive legal framework for bodies corporate, owners, and managing agents, and came into effect on October 7, 2016.
Key Provisions
The Act introduces several key provisions that regulate the operation of sectional schemes:
Maintenance and Insurance: The Act clearly defines the shared responsibilities for maintenance and mandates that the body corporate must insure the building(s) to their full replacement value against fire and other prescribed risks
Establishment of Bodies Corporate: The Act mandates the creation of a body corporate, which is a legal entity comprising all unit owners in the scheme, responsible for managing the common property.
Financial Management: The legislation requires bodies corporate to establish and maintain two distinct funds: an administrative fund for daily operating costs and a reserve fund for future maintenance and repairs. This ensures schemes can cover major expenses without relying solely on ad-hoc special levies.
Management and Conduct Rules: The Act provides prescribed management and conduct rules that regulate the use and enjoyment of sections and common property. Bodies corporate can amend these rules with the appropriate resolutions (special or unanimous), but changes must be approved by the Chief Ombud.
Fiduciary Position of Trustees: Trustees are placed in a fiduciary relationship to the body corporate, requiring them to act honestly, in good faith, and avoid conflicts of interest.
Dispute Resolution: The Act works in conjunction with the Community Schemes Ombud Service Act, 2011, which provides a formal mechanism for resolving disputes within community schemes through an ombud, rather than costly and time-consuming court proceedings.
Meetings and Decision-Making: It outlines clear guidelines for calling and conducting general meetings, including notice periods and voting thresholds for special and unanimous resolutions, to ensure transparent decision-making.
