The importance of good governance and accurate record keeping in sectional title schemes

Effective record keeping is crucial for responsible property management in sectional title schemes. It ensures compliance with legal regulations, fosters transparent communication, drives efficient decision-making, and ultimately contributes to the overall well-being of a scheme. Let’s consider an example which highlights the importance of proper procedures and accurate record-keeping.

At a body corporate’s annual general meeting on 16 August 2011, there were discussions about the extension of a section of Owner A about whether to “give away” a portion of the common property to Owner A for the extension. Additionally, after the meeting no formal nor a written resolution regarding the disposal of the portion of the common property was circulated to members.

Owner A extended their section without submitting architectural plans to the trustees for consideration or approval from the members of the body corporate. Various disputes then arose and without proper records, there was no clear documentation of whether or not these crucial decisions had actually been made. It took over three years but at a special general meeting on 5 February 2015, members finally resolved that Owner A owed the body corporate for the value of the portion of the common property that they incorporated into their section, including all associated costs

Legally, a body corporate must follow specific procedures to alienate common property and approve unit extensions:

• Unanimous resolution: a body corporate may be authorised to alienate or to let the common property or a portion thereof by unanimous resolution and execute the necessary documents for these purposes (section 5(1)(a) of the STSMA).
• Special resolution: any owner wanting to extend their section must get authorisation to do so by special resolution (section 5(1)(h) of the STSMA). This must be obtained before submitting the draft sectional plan to the Surveyor General for approval.

Section 17(2) of the Sectional Titles Act, 95 of 1986 requires that a copy of the unanimous resolution to alienate common property is submitted to the Deeds Office in order to pass transfer. Minutes of meetings, unless signed by all members, are not sufficient substitutes.

• Legal compliance: Ensures the scheme adheres to legal requirements, avoiding disputes or penalties.
• Historical perspective: Provides a record of past decisions, helping trustees and managing agents make informed choices and plan for the future.
• Dispute resolution: Simplifies communication and resolution of disputes by having documented records of agreements, repairs, or alterations.
• Historical archive: Acts as a historical archive for future generations of residents and trustees to understand the scheme’s evolution.

If the body corporate in the example above had kept accurate records, they could have saved years of frustration and unnecessary legal fees. By maintaining accurate records, community schemes can operate more smoothly, transparently, and effectively, benefiting all members involved.

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