There are many different responsibilities and roles within a Sectional Title Scheme, so it is important to understand the dynamics in play. Making sense of it is Steven Pool, Managing Director of Attlee Agency, which manages over 350 Sectional Title Schemes, Shareblocks and Homeowners Associations.
There are four main role-players who together ensure that all rights and responsibilities have the goal to maintain a harmonious living environment within a Sectional Title Scheme:
The tenant
The role of a tenant involves several key responsibilities and rights within a rental agreement. These roles can vary depending on the specific terms of the lease agreement.
Generally, tenants:
Abide by lease terms: Tenants must follow the rules and regulations outlined in the lease, including restrictions on noise, pets, and subletting.
Pay rent: Timely payment of rent as specified in the lease agreement is a primary responsibility.
Maintain the property: Tenants are typically expected to keep the rental unit clean and in good condition, reporting any necessary repairs to the landlord.
Respect neighbours: Maintaining a respectful environment for other residents is crucial, including managing noise levels and shared spaces.
Communicate with the landlord: Open communication regarding any issues or concerns with the property is essential for a good tenant-landlord relationship.
The landlord
The role of a landlord includes several key responsibilities, which help maintain the overall integrity and functionality of the Sectional Title Scheme.
Property maintenance: Landlords are responsible for maintaining the individual unit in good condition and addressing repairs as needed.
Compliance with regulations: They must ensure that their property complies with relevant laws and regulations, including safety standards.
Payment of levies: Landlords must pay the levies or fees required by the Body Corporate for the maintenance of common areas and shared facilities.
Respecting the Body Corporate: They should adhere to the rules set by the Body Corporate and participate in meetings or decision-making processes as required.
Tenant management: Landlords are responsible for screening and selecting tenants, ensuring that they understand and comply with the rules of the Sectional Title Scheme.
Communication: Maintaining clear communication with tenants regarding their rights and responsibilities, as well as any changes in the property or rules.
Handling disputes: Addressing any disputes or issues that may arise between tenants or between tenants and the Body Corporate. Insurance: Ensuring appropriate insurance coverage for the unit.
The Body Corporate
The Body Corporate plays a crucial role in the management and governance of a Sectional Title Scheme. Overall, the Body Corporate is essential for the effective functioning and management of Sectional Title Schemes, fostering a collaborative and well-maintained living environment. Its primary responsibilities include:
Management of common property: The Body Corporate oversees the maintenance and management of the common property and facilities, ensuring they are kept in good condition.
Enforcement of rules: It establishes and enforces rules and regulations that govern the behaviour of residents, promoting a harmonious living environment.
Financial management: The Body Corporate is responsible for budgeting, collecting levies from owners, and managing the financial affairs of the scheme, including maintaining reserves for future expenses.
Insurance: It arranges and manages insurance for the common property and liability cover, protecting the interests of all owners.
Communication: The Body Corporate serves as a communication link between owners and tenants, providing updates and facilitating discussions on important matters.
Decision-making: It holds meetings to discuss and vote on significant issues affecting the scheme, ensuring that all owners have a voice in the decision-making process.
Compliance with legislation: The Body Corporate ensures that the scheme complies with relevant laws and regulations, including those related to health and safety.
Conflict resolution: It addresses disputes between owners and assists in resolving conflicts within the community.
The Property Management agent
The role of a Property Managing Agent in a Sectional Title Scheme involves several key responsibilities:
Financial administration: They handle budgeting, collection of levies, and financial reporting, ensuring transparency and accountability in financial matters.
Maintenance co-ordination: The agent arranges quotes for the maintenance and repair of common areas, ensuring they are kept in good condition and addressing issues promptly.
Rule enforcement: They help enforce the rules and regulations set by the Body Corporate, addressing violations, and facilitating compliance among residents.
Communication liaison: The agent serves as a point of contact between the Body Corporate, owners, and tenants, facilitating communication and resolving concerns.
Meeting facilitation: They organise and manage meetings for the Body Corporate, preparing agendas, and taking minutes to document discussions and decisions.
Vendor management: The agent co-ordinates with contractors and service providers for various needs, such as cleaning, landscaping, and maintenance.
Compliance oversight: They ensure that the property complies with relevant laws and regulations, including health and safety standards.
Basics of a rental Sectional Title lease agreement typically include several key components and clauses to ensure clarity and protection for both the landlord and tenant.
Here are the basics:
Parties involved: Identification of the landlord (owner) and tenant, including their contact details.
Property description: A detailed description of the property being leased, including the Sectional Title unit and any exclusive use areas.
Lease term: The duration of the lease agreement, including the start and end dates, and any renewal options.
Rental payment: Details regarding the rental amount, payment method, due dates, and any applicable penalties for late payment.
Deposit: Information on any security deposit required, including the amount and conditions for its return.
Maintenance and repairs: Clarification of responsibilities for property maintenance and repairs, including obligations of both the landlord and tenant.
Conduct rules: Reference to the Body Corporate's Conduct Rules and the tenant's obligation to adhere to them.
Use of property: Restrictions on the use of the property, such as limitations on noise, subletting, or keeping pets.
Insurance: Information on insurance requirements for both the property and the tenant’s contents.
Termination Clause: Conditions under which the lease can be terminated by either party, including notice periods.
Dispute Resolution: Procedures for resolving disputes that may arise during the tenancy.
The difference between common property and exclusive use property Common property is owned collectively by all Sectional Title owners in an undivided share. Examples of common property include, but are not limited to, driveways, gardens, entertainment areas, and communal swimming pools. In contrast, exclusive use areas (EUA) are parts of the common property designated for the exclusive use of specific owners. Typical exclusive use areas within Sectional Title Schemes may include gardens, parking bays, and storerooms. Owners with rights to exclusive use areas are expected to contribute an exclusive use levy to the Body Corporate.
Levies
Unless levies are specifically covered in the schemes Management Rules and calculated by a method other than participation quota (PQ), the scheme’s levies would be calculated by participation quota (PQ%).
Participation quota is a formula to used determine the percentage an owner should contribute towards the collection of levies. An owner’s PQ is calculated by taking the total square meterage of the scheme and dividing this into the size of the owners section.
EG: Total square meterage of the scheme = 3456sqm
Square meterage of owners section = 267 sqm
Owners PQ%: (267 / 3456 x 100) = 7,7256%
All participation quota’s are calculated to four decimal places.
Rules of the complex
In a Sectional Title Scheme, the responsibility to furnish tenants with a copy of the scheme's Conduct Rules typically falls to the landlord (the unit owner). The landlord should provide the rules to their tenants at the beginning of the tenancy to ensure that they are aware of the regulations governing the property.
Additionally, the Body Corporate may also make the Conduct Rules available to all residents and should ensure they are accessible for reference. However, it is ultimately the landlord's responsibility to ensure that their tenants receive this information.
If in contravention of the Conduct Rules, the owner is responsible for informing their tenants of any breaches. Upon instruction from the trustees, the property managers will notify the owners of the section regarding such breaches. The owners are then required to communicate this information to their tenants.
Complex insurance
The Body Corporate insurance in a Sectional Title Scheme typically covers several key areas, and which must be regularly reviewed to ensure adequate coverage for all potential risks:
Building insurance: This covers the structure of the buildings within the scheme, protecting against risks such as fire, storms, and other natural disasters.
Common Property insurance: This includes coverage for shared areas and facilities, such as gardens, driveways, pools, and other communal amenities.
Liability insurance: This protects the Body Corporate against claims arising from accidents or injuries occurring in common areas, ensuring financial protection in case of lawsuits.
Fidelity insurance – This cover protects the Body Corporate against any misappropriation of funds by either a scheme executive (trustee) or the managing agent. This coverage is mandatory and is typically provided under a separate policy from the scheme's primary insurance policy.
Public Liability: Coverage for claims made by third parties for property damage or personal injury occurring on the common property.
Directors and Trustees Liability: This protects the Body Corporate’s Directors; committee members or trustees against legal claims arising from their decisions and actions while performing their duties.
Loss of rent: In some cases, this may cover loss of rental income due to damage to common areas affecting unit occupancy.
Burst geysers
The Body Corporate insurance policy covers burst geysers. The tenant should notify the owner, who will contact the property manager who will complete a claim form on behalf of the owner and submit it to the Body Corporate insurers for reimbursement of the replacement geyser cost. The refund will be subject to the excess that the owner is responsible for paying.
Building and complex plans
In a Sectional Title Scheme, the building plans are typically kept by the Body Corporate or its Property Managing Agent. They are responsible for maintaining important documentation, including: Architectural plans: Original building plans and any modifications or alterations made to the property. Compliance documents: Certificates of occupancy and compliance with local building regulations. Records of changes: Documentation of any renovations or changes made to individual units or common property.
These documents may also be stored with the local municipality or relevant authorities, but the Body Corporate should ensure that they are accessible for reference by owners.
