Sectional Title Schemes and Generators - Who Pays And Whose Permission is Needed
Category Sectional Title Issues
When your children are studying for an important test, having a generator on the scheme's common property to stand in during load shedding is a bonus. Less so if you bought into the same complex because of its peaceful ambience and the rich bird life in the water feature that your unit overlooks, which is now disturbed by the unworldly noise of the very costly generator.
To install or not
Managing a sectional title scheme often poses tricky questions. An example is when trustees, as chosen representatives of the body of owners in the scheme, are asked by an owner to consider the installation of a generator for the scheme on the common property. Invariably the decision is not only a weighing up of owners' interests; the trustees must also consider the provisions of the Sectional Titles Schemes Management Act ('the Act'), the regulations thereto, the schemes' rules and the directives of owners given at owners' meetings.
So how will such a decision-making process pan out?
Management Rule 29 of the Act sets out rules for when alterations or improvements, such as affixing a generator, may be made to the common property. Depending on whether the improvement or alteration is regarded as reasonably necessary or not, different procedures apply.
If it is regarded as reasonably necessary
In this instance, the trustees must prepare a proposal and may implement it only after all owners have been given at least 30 days' written notice setting out certain details relating to the acquisition and installation of the proposed generator, including:
- the estimated costs;
- where the funding will come from to pay for it, including if a special levy will be raised or a loan obtained; and
- motivation for the proposal, including drawings.
After the 30 day period the trustees may proceed unless, during this notice period, there was a request from an owner for a general meeting to be called at which to discuss the proposal. In this instance, the trustees may only proceed with the installation if the proposal was approved at the requested meeting by way of a special resolution.
In view of the security risks posed by electricity outages and load shedding, such generators are likely to be considered "reasonably necessary". Many schemes' security systems, the electric fencing, alarms, electric gates and intercoms are generally dependent on the electricity supply. When there is load shedding, occupants' safety may be put at risk. For this reason a generator should, in most instances, be viewed as a necessary improvement to the sectional title scheme. But this is not necessarily the case and it will differ from scheme to scheme.
Not reasonably necessary
If it is not considered reasonably necessary for a particular scheme, then a unanimous resolution must be obtained before such installation may proceed.
How about rather tapping from the reserve fund?
Trustees are obliged by the Act to establish and maintain both an administrative fund and a reserve fund. The latter must be sufficient to cover the cost of future maintenance and repair of the common property. The question that arises then is whether the reserve funds can be applied to purchase such a generator.
Generally, the administrative fund provides for the estimated costs for repairs and maintenance on an annual budgeted basis, whilst the reserve fund covers unforeseen costs of maintenance and repairs, which have not been budgeted for.
The trustees do not generally have the power to use surplus money in the reserve fund for expenses not budgeted for, without having obtained owners' consent. Thus, if the acquisition of a generator was not budgeted for, the trustees may not use the reserve fund to finance it without first having obtained the appropriate resolution as mentioned above.
Author STBB Attorneys
Published 13 Dec 2021 / Views -