Mike Spencer – Platinum Global
When a retirement village is owned as a sectional title scheme it is run as such – the rules would have been changed by the developer to reflect the character of the complex.
Nonetheless it is a sectional title scheme and the normal basic rules apply, i.e. audited annual report, AGM, payment of levies etc.
Anyone who for any reason does not pay their levies or is in breach of the rules has to be taken to task and the trustees are obliged to take legal action if this is required to collect outstanding debt.
Levies are payable in terms of the Sectional Titles Act and part of the levy must be allocated to building up a fund for the future maintenance of major items.
For example, if you know that the building is going to need painting in five years time and the quote is R1 million, then R200 000 has to be built into the levy to cover this amount.
The new Act will make this very clear. This is to avoid special levies which not everyone can afford (especially pensioners on a fixed income). This is called the Reserve Fund and well managed buildings now budget for a portion of future maintenance in their current levies to cover items such as painting, waterproofing, and the replacement of the lifts, etc.
When it comes to a sectional title scheme that is also a retirement village, the difference is that there may well be special rules regarding its use as a retirement village.
The budgeting would have to be adjusted to take these rules into account but it should be remembered that the body corporate is primarily involved in the maintenance, management and insurance of the building itself and the common property.
Read the reader’s question here.
