Ombud’s fee for all community schemes

Tim Lineker and Colin Edwards of Pinelands Place and Thornton Place respectively, want to know why, in addition to the monthly fee of R40, which is handed over quarterly to the Community Schemes Ombudsman (CSO) they have to pay an extra R50 to register a complaint and a R100 adjudication fee.

Mr Edwards said the R40 he and his wife have to pay means 30 eggs, three loaves of bread and some electricity, and it will have to come from the R95 increase “we as state pensioners were granted in April”.

However, there is a waiver for those who do not fall in the legislated bracket.

Mr Lineker who has life rights asked if he was affected by the new legislation. The ombudsman reportedly collected R2 million in the Western Cape in February, he said. “What is the money for?”

When I asked the Cape Town legal firm who helped to draw up the CSO legislation they said they didn’t have time to answer my questions, (“Finally an ombud for community schemes”, Off My Trolley October 12).

However, lawyer Marina Constas, a sectional title expert and director of Biccari Bollo Mariano Inc (BBM), replied promptly. “The normal levy is for the maintenance and management of common property, scheme insurance, salaries, payment of auditors and the managing agent, electricity for common property, utilities and statutory payments. The ombud levy is separate and is a different piece of legislation. The R40 levy per unit goes directly to the ombud to fund the service,” she said.

At a workshop, Ms Constas said the three phases of sectional title are referred to as “Generations”, all modelled on the Strata Titles Act in New South Wales, Australia.

The first was valid from 1971 to 1973; the second from 1986 to 1988, the third from 2011 to 2016 when the CSO Act came into being, five years after it was promulgated in June 2011.

“Consumer complaints about disputes in sectional title schemes were referred to the land affairs department as far back as 1987 and consultants were appointed to investigate alternative methods of dispute resolution, and draft a more streamlined, easier to understand act.

“Over the last 20 years they looked at legislation in Singapore, Australia and Israel, resulting in the two new Acts becoming effective in October last year which resulted in the establishment of the CSO and the promulgation of the Sectional Title Schemes Management Act 8 of 2011.

“The aims of the CSO are to provide a mediation and adjudication platform – alternate dispute resolution (ARD) – and to educate the public about the CSO as well as store governance documentation,” said Ms Constas.

Sectional title; homeowners’ associations; shareblock building; retirement villages; gated villages with a constitution; and social co-operatives fall under the ambit of the ombud, and may eventually include other communal arrangements.

“The ombud must, among other functions, develop and provide an ARD; train conciliators, adjudicators and other employees of the service and control the quality of scheme governance documentation.

“The CSO must promote good governance of community schemes and educate owners, tenants and executive committees about their rights and obligations and monitor community scheme governance,” Ms Constas said.

Executives should take steps to learn about the affairs and activities of their scheme and the legislation.

Ms Constas said the CSO will be funded through Parliament; levies; fees for documents and loans.

“The CSO levy is charged to the scheme which it must pay as one lump sum every quarter, and recover it from the owners. The levy on each unit is the lesser of R40 or 2% of the amount by which the monthly levy of a unit exceeds R500. So, the levy can never exceed R40 a month,” said Ms Constas.

Owners pay a R50 fee for a dispute resolution, R100 for adjudication and R8 for a copy of any governance documents.

However, there is a waiver for those who do not fall within the bracket set by legislation.

“The ombud will adjudicate on financial, behavioural, scheme governance issues, general meetings, management services, and work relating to private and common areas.

“The CSO will first want to know whether internal dispute resolution processes have been conducted, if not then he may refer the matter for mediation or conciliation. But if there is no prospect of success, he must refer the matter to adjudication,” Ms Constas said.

The adjudicator must grant or reject each part of the relief sought; apportion liability of costs; set out the reasons for the order and emphasise the right to appeal.

The order he makes can be made an order of the court and if the applicant or the body corporate is unhappy with the judgment they can appeal in the High Court, but only on a question of law.

Any owner or tenant can ask the ombud to mediate in a dispute.

If owners or trustees fail to provide access to books, or fail to comply with a directive of CSO they could face a fine or jail of up to five years and up to 10 years for a second offence.

Ms Constas said all community schemes must insure against the risk of loss of money as a result of fraud or dishonesty.

The minimum amount of cover for the Fidelity Fund insurance is the total value of reserves and investments at end of the last financial year and 25% of the Community Scheme’s operational budget for the current year.

You can visit www.csos.org.za for more information.

Call 011 622 3622 for more about the workshops Ms Constas holds.