Sectional Title Solutions
In our effort to supply value-add Solutions to Sectional Titles and Home Owner's Associations (Community Schemes) across South Africa, we have put together a resource library.
Here you will find free resources relevant to community living and management to help your Community Scheme thrive.
CSOS PRACTICE DIRECTIVES & CIRCULARS
The regulatory authority for all Community Schemes in South Africa, the Community Schemes Ombud Service (CSOS), came into operation on the 7th of October 2016. The CSOS issues operational guidelines, in the form of Practice Directives and Circulars, as and when required to assist Community Schemes with the understanding and implementation of the Community Schemes Ombud Services Act, 9 of 2011, its Regulations and procedures.
The CSOS Practice Directives and Circulars are divided into the following categories:
- Payment of levies & fees
- Amendment of Community Scheme governance rules
- Dispute resolution
- Waiver of levies
- Application for special and unanimous resolutions
- Frequently Asked Questions (FAQ)
CSOS Practice Directive No 1 of 2018 – Amendment of the Practice Directive on Payment of Levies and Fees (14-Jun-18)
The CSOS Practice Directive No 1 of 2018 was issued on the 14th of June 2018 and provides amended and more detailed guidelines in respect of the initial Practice Directive (No 1 of 2017) issued on the payment of levies and fees.
In this Practice Directive, you will find the following:
- the difference between a “CSOS levy” and a “scheme levy”;
- an explanation of a Community Scheme’s obligation to pay the CSOS levy;
- the payment intervals of the CSOS levy;
- an explanation on the administrative process to be followed by a Community Scheme for the payment of their CSOS levy (including the reference numbers and banking details to be used for the payment of the CSOS levy);
- guidelines on how to deal with CSOS levies if you stay in a “scheme within a scheme”;
- confirmation of what will happen if your Community Scheme fails to pay its CSOS levy.
CSOS Practice Directive No 2 of 2019 – Amendment of The Practice Directive on Payment of Levies and Fees (01-Aug-19)
The CSOS Practice Directive No 2 of 2019 was issued on the 1st of August 2019 and provides amended guidelines in respect of the first Practice Directive (No 1 of 2018) issued on the payment of levies and fees.
This Practice Directive differs from the one issued in 2018 in that it:
- amended the email address to be used by Community Schemes that have not yet been issued with a registration/reference number (paragraph 6.1);
- added a request that Community Schemes inform CSOS when they change their Managing Agent to ensure their receipt statements are sent to the correct Managing Agent;
- added a paragraph dealing with the waiver of levies (where a unit owner has been exempted from paying CSOS levies).
CSOS Practice Directive – Regarding amendment of rules and issuing of compliance certificates during lockdown period (25-May-20)
On the 25th of May 2020, CSOS issued a Practice Directive regarding the amendment of rules and issuing of compliance certificates during the lockdown period.
In summary, this Practice Directive provides:
- confirmation that CSOS’ Governance Unit completed the review of most of the Community Scheme governing documentation that was submitted to them;
- confirmation that they will be issuing compliance certificates to Community Schemes whose rules were approved and compliant;
- the process to be followed by CSOS in respect of the issuing of these compliance certificates.
On the 6th of May 2021, the CSOS issued an updated circular on the amendment of rules in terms of the Sectional Title Schemes Management Act, 8 of 2011 (“STSMA”).
In this circular Community Schemes will find guidelines in respect of the following:
- the administrative procedure to be followed when applying to have their rules amended;
- the requirements to be met in respect of an application for the amended of the scheme’s rules;
- the quality assurance process to be followed by the CSOS when reviewing the application for the amendment of the Community Scheme’s rules;
- the undesirable rules as identified by the CSOS.
The CSOS Practice Directive No 1 of 2019 was issued on the 1st of August 2019 and replaced the Practice Directive No 2 of 2018 on dispute resolution in its entirety. This Practice Directive provides detailed information on the implementation, procedures and requirements for dispute resolution applications lodged with the CSOS.
More specifically, this Practice Directive provides guidelines in respect of the following:
- the required form to be completed when applying for dispute resolution at CSOS;
- where to find and submit the required dispute resolution application form;
- guidelines on how to complete the required dispute resolution application form;
- the requirement of an internal dispute resolution process;
- the administration process followed by CSOS after submission of an application for dispute resolution, including the payment process of the prescribed fee;
- the processes followed to resolve the dispute (in the form of conciliation and adjudication);
- the Adjudication Order issued and how to enforce it if there is non-compliance;
- what CSOS deem as urgent matters and how to apply for relief in urgent matters;
- the appeal process to be followed if not satisfied with the Adjudication Order issued (remember you can only lodge for appeal on a question of law).
The CSOS Practice Directive No 3 of 2017 was issued on the 1st of December 2017 to provide more information as to who will be entitled and/or qualify to apply for a discount or waiver for the payment of CSOS levies.
In this Practice Directive you would find the following:
- categories of persons who can apply for a discount or waiver for the payment of CSOS levies;
- categories of persons who automatically qualify for the waiver of the payment of CSOS levies;
- the procedure to follow when you are applying for a discount or waiver of the payment of CSOS levies;
- grounds of refusal for an application for a discount or waiver.
CSOS Circular No 2 of 2018 – Procedure for the Application of relief in terms of S6(9) of the STSMA (01-Aug-18)
On the 1st of August 2018, the CSOS issued a circular on the procedure for the application of unanimous and special resolutions as set out in terms of section 6(9) of the Sectional Title Schemes Management Act, 8 of 2011 (“STSMA”).
Section 6(9) of the STSMA states:
“6. Meetings of Bodies Corporate
(9) A Body Corporate or an owner who is unable to obtain a special or unanimous resolution may approach the chief ombud for relief.”
In this circular Community Schemes will find guidelines in respect of the following:
- the procedure to follow when applying to the CSOS for relief in terms of section 6(9) of the STSMA (quoted above);
- the documentation to be submitted in support of an application for relief in terms of section 6(9) of the STSMA;
- the approval and assessment process to be followed by the CSOS.
On the 24th of March 2020, CSOS issued their first Practice Directive in response to the initial 21-day nationwide lockdown period as announced by the South African President, Mr Cyril Ramaphosa.
In this Practice Directive you would find the following:
- details on the suspension of contact processes such as conciliation, adjudication and investigation until 17 April 2020;
- confirmation that all matters set down for hearing will be postponed until the national lockdown is suspended;
- the contact information in the event of exceptional circumstances.
CSOS COVID-19 19 Practice Directive – Response Plan on the Operations of Schemes during Lockdown (27-Mar-20)
On the 27th of March 2020, another COVID-19 Practice Directive was issued by CSOS providing a plan to be implemented by Community Schemes in terms of the Disaster Management Act 57 of 2002 (“DMA”) and its Regulations.
This Practice Directive deals with the following:
- the regulation that prohibits gatherings in the DMA Regulations;
- the regulations to be applied by Sectional Title Schemes during the lockdown period in respect of Trustee meetings and Owners meetings (Annual General Meeting and Special General Meeting);
- how Homeowners Associations and Share Block Companies can continue with their meetings;
- how Community Schemes should deal with the health of their employees and scheme members;
- health tips;
- key contacts at CSOS during lockdown.
CSOS COVID-19 Practice Directive – Amendments to the Initial COVID-19 Practice Directive (21-Apr-20)
On the 21st of April 2020, an amendment to the Initial COVID-19 Practice Directive was issued by CSOS in line with the extension of the lockdown period and the Disaster Management Act 57 of 2002 (“DMA”) Regulations.
This Practice Directive makes provision for the following:
- An Operational Response Plan confirming:
- dispute resolution service will resume only after the lockdown has been lifted;
- email addresses to be used for the submission of Community Scheme registrations, annual returns, waiver applications, amendments to Community Scheme rules and training requirements.
- A plan to be implemented by Community Schemes on the:
- use of Common Property;
- Community Scheme Executive’s duty to ensure compliance with the DMA Regulations (the wearing of masks, social distancing, sanitising);
- convening of meetings;
- consideration of reasonable payment arrangements and/or relief plans for the payment of levies in circumstances where their members have been adversely affected by the COVID-19 pandemic.
CSOS COVID-19 19 Practice Directive – Amendment to Practice Directive on Dispute Resolution and Clarity on Meetings (23-Jun-20)
On the 23rd of June 2020, CSOS issued a Practice Directive to amend the 2019 Practice Directive on Dispute Resolutions and to provide clarity on Community Scheme meetings during Level 3 lockdown.
In this Practice Directive you will find:
- confirmation that the CSOS reconvened the conciliation and adjudication of dispute resolution applications as of the 1st of June 2020;
- confirmation that the above-mentioned procedures can take place without parties having to meet face to face;
- timeframes for the filing of certain documentation and/or responses that form part of the dispute resolution process;
- the manner in which conciliation procedures will be conducted under the Disaster Management Act 57 of 2002 (“DMA”) Regulations;
- the manner in which adjudication procedures will be conducted under the DMA Regulations;
- guidelines for the conducting of General and Trustee meetings during Level 3 lockdown.
This CSOS FAQ document is not a Practice Directive, but it deals with and answers a lot of important questions asked by members of Community Schemes.
The CSOS addresses a few interesting questions in this document, amongst others:
- Who appoints the Managing Agent and the employees of a Body Corporate?
- Can the Trustees lodge an application for dispute resolution with the CSOS if a summons has already been issued against a levy defaulter?
- Must a Managing Agent have a Fidelity Fund Certificate?
- Must an owner first waive a meeting before a Skype / Zoom / Microsoft Teams meeting can take place?
- What will happen if the Community Scheme does not want to register with CSOS?
- Can the person who is involved in the or preparation of the monthly financial report audit the financial statements?
- In levy collections and arrears, does the CSOS have monetary jurisdiction?
It is important to note that this FAQ document was issued by CSOS and does not necessarily reflect the views and/or opinions of STS or any of its employees.
FREE DOWNLOADABLE TEMPLATES
In terms of section 4(e) of the Sectional Titles Schemes Management Act 8 of 2011 (“STSMA”), a Sectional Title Scheme requires a special resolution to borrow funds required by the scheme in the performance of its functions or the exercise of its powers.
STS created the following templates to assist and guide our Sectional Title Scheme clients who want to adopt our Funding solutions:
- Special resolution to be adopted at a meeting
- Special resolution to be adopted in writing (Round Robin)
- Trustee resolution authorising the signature of our loan documentation
- Notice and Trustee resolution for calling a meeting on short notice (Urgent SGM)
- Trustee resolution waiving PMR 20(9)(a)
The STSMA confirms that a special resolution will be passed at an Annual General Meeting (“AGM”) or Special General Meeting (“SGM”) if:
- 75% calculated both in value and in number,
- of the votes of the members of a Body Corporate
- who are present or represented in proxy
- vote in favour of the proposed special resolution.
- the Body Corporate must give all members at least 30 days written notice of this meeting, specifying the proposed special resolution in the notice of the meeting (except where the rules provide for shorter notice);
- the quorum requirements will have to be met before any business can be transacted at the meeting.
These are the quorum requirements:
for a Community Scheme with less than 4 primary sections or a Body Corporate with less than four members:
- members entitled to vote and holding two-thirds of the total votes of members in value have to be present or represented in proxy.
for any other Community Scheme:
- members entitled to vote and holding one-third of the total votes of members in value, have to be present or represented in proxy;
- at least 2 persons must be present unless all the sections in the Community Scheme are registered in the name of one person;
- when calculating the value of votes required to constitute a quorum, the value of votes of the developer must not be taken into account.
If a special resolution is passed at a General meeting by members holding less than 50% of the total value of all members’ votes [PMR 20(9)(a)]:
- the Body Corporate must not take any action to implement that resolution for 1 week after the meeting,
- UNLESS the Trustees resolve that there are reasonable grounds to believe that immediate action is necessary to ensure safety or prevent significant loss or damage to the Community Scheme; OR
- within 7 days from the resolution, members holding at least 25% of the total votes of all members in value may,
- by written and signed request delivered to the Body Corporate, require that the Body Corporate hold a Special General Meeting to reconsider the resolution.
Below is our special resolution templates to be used when a Body Corporate wants to adopt a special resolution, to borrow funds in terms of our Funding solutions, at an AGM or SGM:
The STSMA confirms that a special resolution can be passed in writing (Round Robin) if:
- the members of a Body Corporate
- holding at least 75% of all the votes
- calculated in value and in number
- agree (vote in favour of) to the special resolution in writing.
Below is our special resolution templates to be used when a Body Corporate wants to adopt a special resolution, to borrow funds in terms of our Funding solutions, in writing:
Prescribed Management Rule (“PMR”) 10(1)(b) of the STSMA Regulations confirms that no document signed on behalf of the Body Corporate is valid and binding unless:
- it is signed on the authority of a Trustee resolution
- by 2 Trustees or
- 1 Trustee and the Managing Agent.
To ensure that the nominated Trustees are duly authorised to sign our loan documentation (when their Body Corporate borrows funds from us), we have created the following templates for Trustee resolutions:
Prescribed Management Rule (“PMR”) 15 (7)(a) of the STSMA Regulations confirms that a General meeting may be called:
- on 7 days’ notice
- if the Trustees have resolved that short notice is necessary due to the urgency of the matter; and
- set out their reasons for this resolution.
The Trustees must not take such a Trustee resolution in regard to a meeting wherein a resolution is proposed to:
- make alterations or improvements to the Common Property that are reasonably necessary; OR
- install separate pre-paid meters on the Common Property to control the supply of water or electricity to a Section or Exclusive Use Area.
Below are the templates for Notice and Trustee resolution to be used by Trustees who wish to call a meeting on short notice (urgent SGM).
Arrear Levy Funding – Template Notice and Trustee resolution for calling a meeting at short notice (urgent SGM)
Prescribed Management Rule (“PMR”) 20(9)(a) of the STSMA Regulations confirms that if a special resolution is passed at a General meeting by members holding less than 50% of the total value of all members’ votes:
- the Body Corporate must not take any action to implement that resolution for 1 week after the meeting;
- UNLESS the Trustees resolve that there are reasonable grounds to believe that immediate action is necessary to ensure safety or prevent significant loss or damage to the Community Scheme.
Please see below the template: