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Sectional title is communal living . . . you won’t always get your way

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When buying into a sectional title scheme it is important to remember that while you are buying ownership of your flat or townhouse, you are also automatically becoming a member of the body corporate.

The body corporate is essentially all the owners acting together.

At an annual general meeting (AGM), the owners will elect trustees who represent the body corporate and these people are the scheme’s connection to the real world.

While in practice the managing agents will handle much of the day-to-day affairs of the body corporate – paying accounts, buying cleaning materials, handling the sending out of accounts and collection of levies and service fees – this is done under the eye of the trustees.

The trustees can manage the decisions that need to be made between general meetings.

They can, for instance, approve repair work that needs to be done, approve dismissal and hiring of cleaners, approve minor quotations and the like.

They run, through the managing agents, the day-to-day work of your schemes.

For major decisions, they should always refer to all the owners – after all, everyone is an owner of a part of the whole common property and any decisions, other than normal day-to-day decisions, should be made by everyone. 

When calling an AGM or special general meeting (any general meeting other than the AGM), trustees must give proper notice of the meeting and add items that need to be discussed and decided on by all owners.

The agenda should have full disclosure about what is to be discussed and should include any information that is relevant.

So, if the trustees think that it is a good idea to build additional parking bays, then they should motivate for it with reasons why they think it would be a good idea and include how much it is going to cost and how it is going to be funded – does the body corporate already have the money to do the work or will there be need for a special levy?

They should also set out the benefits – for example, will rent be charged for the parking bays and will this cover the cost in the medium or long run?

Each decision should be voted on by the owners.

While the Sectional Titles Act says that voting is done on a participation quota (PQ) basis, in most cases it is for practical reasons done by a show of hands.

The majority decides which way the vote goes.

In reality, there is often a consensus (when just about everyone agrees) but occasionally one or two owners will not agree.

The majority has the say – you may not like it, but you have to live with the decision.

One word of caution though is that decisions have to be logical.

For example, you cannot decide to raise a special levy based on an equal basis – it must be done on a PQ basis.

You cannot, for example, decide not to include an owner living on the ground floor from paying his/her share of a special levy to repair the lift.

If you are really unhappy with a decision made by your body corporate and feel that the decision is unfair or prejudices a particular owner then you can make a complaint to the Community Schemes Ombud Service tribunal which will look at the merits of your complaint.

  • Mike Spencer is the founder and owner of Platinum Global. He is also a professional associated property valuer and consultant with work across the country as well as Eastern Europe and Australia.

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Property

City properties need a touch-up to remain attractive

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DILAPIDATED PROPERTIES . . . Older buildings built before the 1980s are in many cases in need of major upgrades

It is apparent that there are more and more buildings, especially in Bloemfontein’s central areas, that are standing vacant and are in a very poor state of repair.

Why is this?

Some of these properties are commercial properties and all buildings have a life cycle.

When new they are effective and efficient but they age physically and socially over the years.

A modern office building is designed very differently from the one that was built in the 1930s.

Young people probably won’t understand how different the working environment was just 30-40 years ago.

At that time there were no computers, no photo copy machines, no fax machines and no cellphones.

Everything was manual – making copies was done by adding extra pages into a manual typewriter with carbon paper inbetween.

Transportation was also very different.

Yes, there were cars but most people did not have one and travelled to work by public transport.

Thus, buildings had little or no parking.

The old UBS building on the corner of Hoffman Square and the mall in Bloemfontein is a 6000-square-metre six-storey building with only 20 basement parking bays.

The Cuthbert’s building opposite has none!

Such buildings have no attraction to modern businesses and are relegated to third-class status.

Having lower incomes, they are marginal properties that are not well maintained and, in many cases, do not generate any net profit income at all.

No wonder they are in the condition that they are in, especially as they can only attract the lowest and poorest class of tenant.

In reality many areas in town should be demolished and regenerated as modern areas to attract business back.

Having said that, the lack of control and enforcement of rules and regulations by council is to blame for many of the woes of city properties.

How can an active council allow buildings to stand in a semi-demolished condition without chasing the owner to fix them up?

Uncollected rubbish, unfixed lights and robots and potholes all tend to diminish the desirability of an area, resulting in lower rentals and a greater problem of deteriorated buildings.

We are now seeing similar problems with some residential buildings.

This is not usually in single residential buildings as when the area gets cheap enough, there appears a type of buyer that can afford to buy up these dilapidated buildings and improve them.

Wilgehof is a great example of this happening.

Built in the 1950s by the Department of Community Development, it used to be an area for poor people but because of its central position and new developments such as Saratoga, the area has grown in stature and improved immensely in condition.

This cannot be said of other areas such as Willows, where lawlessness is rife because of lack of enforcement by the metro.

This is one of the least safe areas in the city and nearly all the family occupants have moved away.

Sectional title legislation also has not made it easy to maintain some older sectional title blocks.

These are community living units with multiple owners.

Older buildings built before the 1980s are in many cases in need of major upgrades, including rewiring and modern electrical connections as well as replumbing of old rusted piping.

But owners have different reasons for owning these properties and there are often conflicts of interest.

One owner living there wants the building to be maintained to a high standard while a landlord owner is looking at the return he obtains and wants the levies as low as possible.

Most owners object to what is perceived as high levies which are necessary to collect enough reserves to be able to tackle these problems resulting in a continuous deterioration in the condition of these buildings.

Current law that makes it near impossible to chase owners who do not pay levies and tenants that do not pay rental and service fees just makes the situation worse.

Again, the difficulty in getting rid of bad tenants such as drug pushers kills most of these buildings.

The current state of the economy does little to make things better.

The high level of rates and taxes and lack of services tends to make it unprofitable for landlords and COVID-19 has reduced the demand for commercial properties.

Theft and vandalism in vacant buildings is a major problem that, combined with low demand, has resulted in many dilapidated buildings around town.

There is no easy solution but it would help if much of the red tape and bias was removed from the property industry.

  • Mike Spencer is the founder and owner of Platinum Global. He is also a professional associated property valuer and consultant with work across the country as well as Eastern Europe and Australia.

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Property

Brain drain threatens property industry

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SECTOR NOT SPARED . . . South Africa is losing potential property buyers through emigration

South Africa is faced with a potentially damaging brain involving both newly qualified and experienced professionals across different disciplines.

I will not limit this topic to professionals in the property industry only because whatever happens in one sector has a direct impact on all matters property.

I will explain briefly: if a teacher, medical doctor, artisan or engineer decide to seek greener pastures abroad, it means the property sector has lost some potential customers who were either going to rent at some point or buy their own property.

Of course, some might decide to invest back home, but that possibility is not always guaranteed.

We have also seen professionals in the property industry such as architects, estate agents and quantity surveyors leaving the country, thereby directly impacting on the work done in the sector.

Practically, every time the economy gets tough it is natural for skilled professionals to look for more active areas to live and work in.

This might mean moving to the Cape from the interior because it is perceived that the government of these areas is better as are the opportunities for these professionals.

Artificial barriers to employment for these professionals can result in them seeing opportunities overseas that are not available to them here.

This is what is happening now, and has been happening for some time.

Highly skilled professionals are moving overseas in the search of better opportunities.

Typical of this would be my son who has an accounting degree and another one in internal auditing.

He is a determined and hard-working professional.

Notwithstanding that he can be seen as being at the top of his profession, he found himself being bypassed by less qualified and experienced people here.

The result was that he was required to do the job for his boss.

He eventually went overseas and has gained far higher and well-paid positions because of his abilities – at a total loss to the South African economy.

This is happening in every sphere of professionalism here, especially among the younger family generation.

Political interference, such as state capture, is also resulting in highly qualified black professionals seeing their future overseas.

America and Europe as well as Australia and New Zealand welcome these well-trained and ambitious people with open arms.

They are seen as hard working and innovative people.

It is amazing how many of these South Africans rise to the top of their professions.

Just think how much Elon Musk would have contributed working in South Africa today.

How can this emigration be stopped?

The answer is simple: just make it attractive for these people to stay.

Get rid of the Broad-Based Black Economic Empowerment and allow promotion on merit.

How can you select doctors on colour and not on their academic results?

Taking a person with C grades against one with A grades just does not make sense.

We need to do away with biased allocation of tenders – get rid of racial undertones and appoint people on their ability to do the job.

A huge problem is going to occur is when the current older generation of professionals retire.

Few new property valuers are coming through because it is a profession that requires a high level of understanding of building processes and detailed comparisons of past data.

Schooling is simply not orientated towards creating administrators and professionals and South Africa is going to see a dearth of professionals over the next few years.

  • Mike Spencer is the founder and owner of Platinum Global. He is also a professional associated property valuer and consultant with work across the country as well as Eastern Europe and Australia.

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Property

Thoroughly inspect the property before buying

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I recently wrote about the new law making it compulsory for sellers to make a declaration about the condition of the property they are putting on the market so that the buyer is fully aware of its condition including faults that may need to be fixed.

I am told there is a Gauteng family that bought a house at an auction only to find it occupied by “illegal tenants” who did not want to move out.

I have been asked discuss how this can be avoided or addressed.

My advice is simple: sellers should declare what they know about the property and they should draw up a contract that makes it clear that the buyer is buying a property that he/she has seen and done the necessary investigations on their own.

The new law regarding seller declarations has only just come into force and it’s not surprising some people could be facing challenges when buying property and don’t know how the new law could assist them.

To begin with, the new law means that the seller is required to declare any faults or condition of the building that is being sold or those that he should reasonably be aware of.

Remember sellers seldom have the skills necessary to know whether or not there were, for example, problems with the foundations unless these had caused problems in the past.

In my opinion, this is yet another piece of legislation that gives more rights to purchasers than they should have.

While I am happy that sellers should indicate any serious problems that they were aware of or should have been aware of, it should also be a requirement that a buyer should understand that they are not buying a new property and should take reasonable care to know what they are buying.

This includes the physical state of the building and anything else that could be going on at the property.

It has always been the case that a seller could never deliberately hide problems – for example, cover over serious dampness with a bookcase or not let a buyer know about roof leaks.

But, in my opinion, it is simply making it more difficult to contract freely.

On the other hand, buyers should carefully look at properties that they are considering buying.

Nobody can expect them to climb into roof spaces and again buyers cannot be considered experts in buildings.

Normally serious problems would be visible from the inside or outside of a property.

Both sellers and buyers should look carefully to see that water flows properly and that there are no serious problems with the building on the market.

They should also remember that not every small defect is a problem.

I have lived in my house for over 45 years.

Is it perfect?

No.

But those small problems – little cracks or a solar system that trips if there is especially heavy rain are not serious problems.

Bottom line: one is buying a second-hand product and not a new one.

It is therefore important to thoroughly inspect it and be sure about its availability before entering into or concluding any purchase agreement.

  • Mike Spencer is the founder and owner of Platinum Global. He is also a professional associated property valuer and consultant with work across the country as well as Eastern Europe and Australia.

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