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The Community Schemes Ombud Service Act

Posted on Feb 7, 2017

The Community Schemes Ombud Service Act requires each community scheme to pay an annual levy to fund the ombud service and authorises the Minister of Human Settlements to determine the levies and fees payable to the ombud.

In terms of the draft regulations released on October 3, the annual levy will be based on the municipal valuation of each unit in a community scheme (see table at link below). Units with a municipal value of up to R500 000 are exempt from the levy. Thereafter, the levies start at R3.40 a month, or R40.80 a year, and increase to R68 a month, or R816 a year, for units with a municipal value of over R2.25 million.

The scheme is responsible for paying the ombud service levies, not the unit owners in the scheme. The scheme will have to collect the levies from owners and will have to budget for them. Regular owners’ levies may have to be increased to take the ombud service levies into account.

Schemes must pay their levies to the ombud service by September 30 each year, or on a date determined by the chief ombud.

A community scheme that fails to pay the levy will be liable for interest, which will be charged at a rate that is one percentage point higher than the prime lending rate, compounded monthly in arrears.

An application for the ombud service to intervene in a dispute must be accompanied by a fee of R50. If the dispute is referred to an adjudicator, there is an additional fee of R100. People with a net monthly household income (gross income less pay-as-you-earn tax) of less than R5 500 are entitled to have both fees waived.

Community schemes or individuals who do not meet the above criteria for the waiver of annual levies or fees may nevertheless qualify for a waiver or discount if they can prove to the chief ombud that paying the levies or fees would cause them financial hardship. They will have to submit a breakdown, on a prescribed form, of their income, expenses and assets.

Disputes submitted to the Community Schemes Ombud Service will be settled by full-time and part-time conciliators and adjudicators; neither the chief ombud nor a regional ombud will be involved in deciding disputes.

Adjudicators’ orders will be enforced as if they were judgments of a magistrate’s court or the High Court, depending on what court would have dealt with the dispute in the absence of the service.

The service has jurisdiction over all community schemes, not just sectional title schemes (see “What is a community scheme?”, below), and it can settle disputes involving occupiers – including tenants – not only owners.

The ombud service was established in 2013 and has been recruiting and training staff since then. Although the service has not officially opened its doors to the public, it is accepting complaints and mediating between parties.

In addition to providing a dispute-resolution service, the Community Schemes Ombud Service will be responsible for monitoring the quality of the documentation that should regulate how community schemes are governed and what owners and residents can and cannot do – for example, the management rules and conduct rules in a sectional title scheme.

The service is also required to perform an educational function, informing owners, occupiers and executives of community schemes of their rights and obligations.

The draft regulations state that all community schemes will have to register with the ombud service and provide it with its governance documents (such as its rules or constitution). By October 31 each year, each scheme must file a prescribed return with the ombud. The return must include the scheme’s annual financial statements, and the names and contact details of its managing agent and members of its executive committee.

WHAT IS A COMMUNITY SCHEME?

A community scheme is an arrangement where the land use is shared and where there is shared responsibility for the land and buildings. The Sectional Titles Schemes Management Act states that such a scheme includes:

* Sectional title schemes established under the Sectional Titles Act;

* Share-block companies governed by the Share Blocks Control Act and the Companies Act;

* Homeowners’ or property owners’ associations, whether constituted as companies under the Companies Act or as common-law associations;

* Housing schemes established in terms of the Housing Developments for Retired Persons Act; and

* Housing co-operatives established under the South African Co-operatives Act.


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The Community Schemes Ombud Service Act

Feb 7, 2017

The Community Schemes Ombud Service Act requires each community scheme to pay an annual levy to fund the ombud service and authorises the Minister of Human Settlements to determine the levies and fees payable to the ombud. In terms of the draft regulations released on October 3, the annual... continue reading

A guide to buying property as an investment.

Nov 23, 2016

The ins and outs of investing in property and the costs included. Over the last few years, many people in South Africa have turned to property as an investment class and entered the property market as investors. Like any other investment, you need to understand how the investment works... continue reading

New sectional title legislation: What owners and investors must know

Nov 16, 2016

New legislation that was gazetted last month has major implications for the budgets and administration of sectional title schemes. Find out how they will affect you. Many cash-strapped South Africans are already struggling with spiralling consumer inflation and shrinking budgets, but scores... continue reading