REAL ESTATE. James & Kruger Inc.

Transcription

1 REAL ESTATE James & Kruger Inc.

2 SECTIONAL TITLE SCHEMES MANAGEMENT ACT (8/2011) & COMMUNITY SCHEMES OMBUD SERVICE ACT (9/2011)

3 COMMUNITY SCHEMES OMBUD SERVICE ACT (CSOSA)

4 CSOSA SECTION 4 FUNCTION OF ACT Ombud Services to assist with governance of Sectional Title Schemes

5 CSOSA SECTION 4 SERVICES Section 4(1)(a) - Dispute Resolution Service Application Form -

6 CSOSA SECTION 38 APPLICATION FOR DISPUTE RESOLUTION Disputes / Complaints: 1. Financial 2. Behavioural 3. Scheme Governance 4. Meetings 5. Management Services 6. Works private areas and common areas 7. General and other issues

7 CSOSA SECTION 4 SERVICES Section 4(1)(b) - Training for Conciliators/Adjudicators Section 4(1)(c) - Regulate, monitor & control quality of governance documentation Section 4(1)(d) - Take custody, preserve and provide public access electronically to governance documentation

8 COMMUNITY SCHEMES OMBUD SERVICE ACT (CSOSA) - REGULATIONS

9 CSOSA - Regulations CHAPTER 4 PROMOTION OF GOOD GOVERNANCE, TRAINING AND EDUCATION REGULATION 14: Duties of Scheme Executives 1. Registration with CSOS 2. Levy payable 2% / R40 of Levy if more than R500 Quarterly payment

10 CSOSA Regulations CHAPTER 4 PROMOTION OF GOOD GOVERNANCE, TRAINING Regulation 14 Promotion of Good Governance AND EDUCATION 3. Obligations of Scheme Executives Attend executive and annual meetings Exercise an active and independent opinion Exercise due diligence Scheme; and Any committee

11 CSOSA - Regulations CHAPTER 4 PROMOTION OF GOOD GOVERNANCE, TRAINING AND EDUCATION REGULATION 15: Fidelity Insurance 1. Loss of money belonging to scheme 2. Insure - Officials and employees

12 CSOSA - Regulations CHAPTER 4 PROMOTION OF GOOD GOVERNANCE, TRAINING AND EDUCATION REGULATION 15: Fidelity Insurance Minimum Cover Scheme s Investment and Reserves 25% Operational Budget

13 CSOSA - Regulations CHAPTER 5 ANNUAL RETURNS, CERTIFICATES AND FORMS REGULATION 18: Scheme Governance Documentation and Information 18(3) Registration Existing Schemes New Schemes 18(1) Annual Financial Returns

14 CSOSA - Regulations CHAPTER 5 ANNUAL RETURNS, CERTIFICATES AND FORMS REGULATION 18: Scheme Governance Documentation and Information CS1 - scheme & property governance documentation trustees & managing agent authorised signatory

15 CSOSA - Regulations CHAPTER 5 ANNUAL RETURNS, CERTIFICATES AND FORMS REGULATION 18: Scheme Governance Documentation and Information CS1A - amend particulars resolution to amend CS2 - audited financial statements schedule of levies payable by each unit filed within 4 months of financial year end

16 Contact Details for the Ombud - Durban Lucky Rapotapi lucky.rapotapi@csos.org.za Nontobeko Dambuza nontobeko.dambuza@csos.org.za

17 SECTIONAL TITLE SCHEMES MANAGEMENT ACT (STSMA)

18 STSMA AIM - Restructure - Simplify

19 STSMA TERMINOLOGY Primary Section Utility Section Scheme Executives / Trustees

20 STSMA ADMINISTRATIVE FUND Section 37 Administrative Fund Reasonably Sufficient Section 3(1)(a) Departure in responsibility of administrative fund Reasonable man

21 STSMA RESERVE FUND Amount reasonably sufficient to cover the cost o future maintenance and repair 1. Creation of a Reserve Fund 2. Standard of sufficiency reasonable man

22 STSMA RAISING OF FUNDS Section 3 Contributions by Developer

23 STSMA MAINTENANCE, REPAIR AND REPLACEMENT PLAN 10 YEARS Written Plan: 1. Major items 10 years 2. Present conditions 3. Time for repair / replacement 4. Estimated cost 5. Expected life 6. Any other information

24 STSMA MAINTENANCE, REPAIR AND REPLACEMENT PLAN 10 YEARS Formula Estimated Cost Past Contribution / Expected Life = Annual Contribution Effective Date of Plan Payment from Reserve Fund Reporting

25 STSMA COLLECTION OF LEVIES Section 3(2) Referral to ombudsman

26 STSMA POWERS OF BODY CORPORATE Section 4(b) - purchase Section 4(e) - borrow money Section 4(f) - security for repayment Section 4(h) - agreements (amenities / services / lease common property) Section 5(1)(a) - sale of common property Section 5(1)(d) - extend common property Section 5(1)(f) - creation of servitudes

27 STSMA TRUSTEES Less than 4 More than 4 Managing agents Regulation 7 arrears Remuneration Indemnification - breach of fiduciary duty / benefit received

28 STSMA TRUSTEES Minutes of meetings Teleconference / digital meetings: Means of communication Ability to participate Able to identify participants Quorum Interim Resolutions

29 STSMA BODY CORPORATE MEETINGS: GENERAL MEETING Section 6(1) Discretion time and form Section 6(5) Proxies Section 6(7) Votes Regulation 20(8)

30 STSMA BODY CORPORATE MEETINGS: GENERAL MEETING Notice AGM s within 4 months FinancialYear 1 October to 30 September Order of Business Rule 17(6) Attendance

31 STSMA MANAGEMENT RULES Annexure 1 & 2 Amendment Section 10(6)

32 STSMA - Regulations FINANCIAL REQUIREMENTS FOR BODY CORPORATES

33 RESERVE FUND SECTION 2 MINIMUM AMOUNTS FOR RESERVE FUND For the purposes of section 3(1)(b) of the Act, the minimum amount of the annual contribution to the reserve fund for a financial year being budgeted for, other than the financial year budgeted for at the first general meeting referred to in section 2(8) of the Act, must be determined as follows:

34 RESERVE FUND SECTION 2 MINIMUM AMOUNTS FOR RESERVE FUND (a) If the amount of money in the reserve fund at the end of the previous financial year is less than 25 per cent of the total contributions to the administrative fund for that previous financial year, the budgeted contribution to the reserve fund must be at least 15 per cent of the total budgeted contribution to the administrative fund; (b) if the amount of money in the reserve fund at the end of the previous financial year is equal to or greater than 100 per cent of the total contributions to the administrative fund for that previous financial year, there is no minimum contribution to the reserve fund; and

35 RESERVE FUND SECTION 2 MINIMUM AMOUNT FOR RESERVE FUND (c) if the amount of money in the reserve fund at the end of the previous financial year is more than 25 per cent but less than 100 per cent of the total contributions to the administrative fund for that previous financial year, the budgeted contribution to the reserve fund must be at least the amount budgeted to be spent from the administrative fund on repairs and maintenance to the common property in the financial year being budgeted for.

36 RESERVE FUND SECTION 2 MINIMUM AMOUNT FOR RESERVE FUND For Example: Levies for the year = R Reserve fund minimum 25% = R Therefore Reserve Fund: a) If less than 25%, budget 15% or R to be contributed to fund b) If R or more no minimum contributions c) If >R but < R only contribute what is expected to be spent 25% is the MINIMUM amount, higher percentages are allowed.

37 FINANCIAL REQUIREMENTS FOR BC S ANNEXURE 1 - FINANCIAL RECORDS, BUDGETS, REPORTS AND AUDIT PART 5: Financial Management Paragraph 26 (1) A body corporate must: (a) Keep proper records of accounts (b) Keep a separate books and bank account for admin and reserve funds (c) Prepare financial statements (d) Prepare a repairs and maintenance plan (e) Prepare budgets for admin and reserve funds (f) Prepare a report by trustees reviewing the affairs for the year

38 FINANCIAL REQUIREMENTS FOR BC S ANNEXURE 1 - FINANCIAL RECORDS, BUDGETS, REPORTS AND AUDIT (2) The books are allowed to be viewed by any member, bondholder or managing agent (3) Records must be kept for 6 years (4) Unless all sections in the scheme are registered in the name of one person, the body corporate must present audited financial statements - within 4 months of the financial year.

39 AUDIT REQUIREMENTS FOR BC S FINANCIAL ANNEXURE RECORDS, 1 - FINANCIAL BUDGETS, RECORDS, REPORTS BUDGETS, AND AUDIT REPORTS AND AUDIT (5) Audit of annual financial statements a) Must be carried out by an independent auditor who has not participated in the preparation of the financial statements or advised thereon b) Do not need to be prepared in accordance with a recognised financial reporting framework

40 AUDIT REQUIREMENTS FOR BC S FINANCIAL ANNEXURE RECORDS, 1 - FINANCIAL BUDGETS, RECORDS, REPORTS BUDGETS, AND AUDIT REPORTS AND AUDIT c) Must include opinions on i) the financial position correctly reflected, ii) compliance with rules 21, 24 and 26, iii) books have been kept and funds protected and iv) the BC is effectively managed. d) Must be completed within 4 months after year end.

41 AUDIT REQUIREMENTS FOR BC S FINANCIAL RECORDS, BUDGETS, REPORTS AND AUDIT Definition of an Auditor: "auditor" means a person accredited to perform an audit in terms of the Auditing Professions Act, 2005 (Act No. 26 of 2005) A Registered Auditor can be found on the Find an Auditor function on the IRBA s Website: Appointing a Registered Auditor at the AGM Paragraph 17 (6) of Annexure of the Regulations states that an Auditor to audit the annual financial statements must be appointed at the Annual General Meeting

42 TAXATION REQUIREMENTS FOR BC S TAXATION: All body Corporates must register for Income Tax with SARS Levies and Expenses are exempt from income tax Interest above R per annum is taxable Tax Returns must be submitted annually to SARS

43 THANK YOU