Amid interest rate hikes and rising crime rates in South Africa, the demand from property buyers for homes in community schemes like sectional title complexes and residential estates is hotting up; but new buyers should be armed with the facts around community schemes legislation to avoid getting burnt.

This is the word from specialist community schemes attorney and BBM Law director Marina Constas. “Before finalising that offer to purchase, prospective buyers should be aware of the minefield that is community schemes legislation and understand their rights and responsibilities when they opt for community living,” she advises.

Community schemes falling under the banners of sectional title, homeowners’ association, shareblock, retirement village and housing co-operative are governed by two Acts, The Sectional Titles Schemes Management Act and the Community Schemes Ombud Service Act, Constas explains.  She highlights essential items to check before buying into a scheme.

Is the scheme registered with CSOS?

“All community schemes are required to be registered with the Community Schemes Ombud Service (CSOS) and pay a quarterly levy. CSOS was established to regulate the conduct of parties within community schemes and to ensure their good governance. The Ombud Service offers a dispute resolution process for owners and residents of community schemes, as well quality training of adjudicators and mediators and improved governance documentation, including ensuring that conduct rules are reasonable.

“Owners, tenants, bodies corporate, homeowners’ associations, shareblocks and retirement villages may bring their disputes to the Ombudsman’s office. Check that the community scheme you are considering buying into is registered with CSOS, as required,” she stresses.

Is the development well maintained?

For sectional title buyers, Constas says it is important to take a good look at the general condition of the whole sectional title complex – not just the unit you are considering purchasing. “Is the development in a good state of repair? If not, beware, as there may soon be special levies imposed for maintenance and repairs.” She advises buyers to ask if there is a special levy in place, or whether one is likely to be imposed soon. This is in addition to establishing what the monthly levy is, and finding out exactly what this levy includes.

What is sold with the unit?

“You should also establish what is sold with the unit,” she recommends. “Is there a garage, carport, garden, storeroom? Is it for your exclusive use, or may it be used by other homeowners in the complex?” Security systems, satellite television and lifts can be thorny issues in sectional title developments. “Find out whether there is a monthly contribution to security, and what security is offered. In terms of satellite dishes, many complexes have their own systems, so you should bear in mind that you may not receive permission to install your own individual dish. If there are lifts, have a look at the lift maintenance contract of the complex.”

Check the managing agent’s credibility

Constas also recommends that buyers do some homework to ascertain the credibility of the complex’s managing agent if there is one. “The main question to ask is whether the managing agent is registered with the Property Practitioners Regulatory Authority. If it is not registered, the body corporate is not protected by the Authority’s fidelity fund. If there is no managing agent, the record keeping ability and success of the body corporate must be investigated.”

Check the conduct rules

Conduct rules are another issue, Constas says, and urges first time home buyers to get a copy of them. “Find out if the rules are filed with CSOS and compliant. Ask for proof. If they are not, they are not enforceable. If you have pets, you need to establish the complex’s pet policy.”

Is the complex being sued?

Other things to check on, she notes, are the amounts owed to the local authority, arrears levies owed and whether or not the body corporate is being sued. “Many complexes owe thousands to the local authority, which is not disclosed by the estate agent. You certainly do not want to buy into a building with great debt.

Are levies paid regularly?

“Also find out whether owners pay their levies regularly. Is there a substantial amount of money owing? If there is, this is indicative of a body corporate not in control of its financial affairs. On the other hand, a body corporate with a buffer, or surplus funds in its account for emergencies, is a good sign that the complex’s finances are in good hands.”

Is the building insured?

Establishing whether the building is insured is also critical, she states. “Obtain the documents, to check your facts,” she recommends. “A building must be insured, and the trustees’ failure to do so is tantamount to gross negligence. Fidelity insurance also applies to homeowners’ associations. An estate or homeowners’ association may be vulnerable to loss of money due to theft or fraud. The directors have to insure the scheme against this risk or loss of money by the dishonest conduct of a scheme executive (themselves), an employee or agent of a community scheme who has control of the money, a managing agent or a contractor who has access to the monies of the scheme.”

Are you sharing a geyser?

Constas’s final piece of advice to sectional title buyers may seem minor, but she says it can cause big problems. “Check where the geyser servicing your unit is situated, and whether you will have to share a geyser with another unit owner. Remember that this will have an impact on you if the geyser bursts or leaks,” she concludes.

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