Sectional Titles Schemes Management Bill [B20B-2010]; Community Schemes Ombud Service Bill [B21B-2010]: briefing

Meeting report

Sectional Titles Schemes Management Bill [B20B-2010] presentation
Mr Kwezi Ngwenya, Legal Advisor, National Department of Human Settlements, explained that the aim of the Bill was to give effect to Cabinet’s strategy to bring all housing-related legislation administered by other departments under the roof of the Department of Human Settlements. In terms of “Breaking New Ground” (BNG), the mandate of the Department had been expanded to encompass the entire residential market.

In particular, the aim of the Bill was to remove the scheme management provisions from the Sectional Titles Act, 1986, and incorporate the scheme management provisions in a new statute that would be administered by the Minister of Human Settlements. The aim of the Bill was also to re-arrange the scheme management provisions to make them more understandable to the public and the persons and authorities who must implement these provisions, but without changing their content.

Mr Ngwenya said that the Department of Rural Development and Land Reform (DRDLR) was at present responsible for the administration of the Sectional Titles Act, 1986 (Act No. 95 of 1986) which currently dealt with the survey and registration of sectional plans, the registration of real rights in sectional title units, and the management and administration of sectional titles schemes. The DRDLR, however, deals primarily with registration and survey issues. Its primary mandate did not necessarily extend to deal with complaints from the public and dealing with problems arising from scheme governance.

The DRDLR and the Department of Human Settlements established a Technical Task Team during 2007 to ensure co-operation and consultation between the two Departments during the drafting process of the Sectional Titles Schemes Management Bill, 2010, and the Sectional Titles Amendment Bill, 2010. Consultation between the two Departments had been ongoing during the drafting process of the two Bills. The Bills were placed in the public domain during 2009 and published in the Government Gazette for public comments. The two Departments both participated in the public consultation process.

The Sectional Titles Act, 1986, would retain all provisions regulating the survey and registration aspects of sectional titles and would continue to operate under the Minister of Rural Development and Land Reform. Once the Sectional Titles Schemes Management Bill, 2010 had been promulgated, the Sectional Titles Act would remain solely with registration and survey issues.

Mr Ngwenya highlighted that the Bill was divided into 21 clauses. Amendments to the Sectional Titles Act, 1986, were set out in the Schedule to the Bill. The Bill was certified by the Office of the Chief State Law Adviser and therefore the Bill was not was not in conflict with any other law.

Mr Ngwenya gave a short summary of the clauses as set out in the presentation document. Clauses 1 to 8 dealt with the definitions of the Bill, the establishment, membership, name capacities and first meeting of bodies corporate. It also dealt with the functions, powers and additional powers of bodies corporate. Clauses 9 to 10 of the Bill covered the body corporate rules applicable to bodies corporate and sectional owners and the effect of quotas and the variation thereof. Clauses 11 to 16 regulated the various legal transactions with regard to the common property and units such as the alienation and letting of common property, expropriation of common property, exercise of a right of extension and the extension of the common property. Clauses 11 to 16 of the Bill also detailed the duties and insurance by owners, the recovery from owners of unsatisfied judgement debts against bodies corporate, and non-liability of bodies corporate for debts and obligations of developers.

Clauses 17 to 21 of the Bill dealt with miscellaneous matters, including the establishment of a Sectional Titles Schemes Management Advisory Council to advise the Minister. This included the appointment of members of the advisory council and the procedure of appointment thereof, the making of regulations and the transitional arrangement and short title and commencement.

Community Schemes Ombuds Service Bill [B21B-2010] presentation
Mr Jan Tladi, Chief Director, National Department of Human Settlements, began by explaining the philosophical background to the ombud. It was the establishment of a simple and inexpensive recourse, to ensure independence, fairness and impartiality. It was to promote uniformity and consistency in hearing disputes and to remedy the protection of the right to good administration. An ever-increasing proportion of housing was developed in the form of ‘community schemes’ in which there was governance by the community involved, shared financial responsibility and land or facilities used in common. Community schemes included sectional titles schemes, share block companies, homeowners associations and housing schemes for retired persons.

Mr Tladi explained that because they involved control and administration of finances, facilities and behaviour, community schemes gave rise to problems and disputes amongst participants which required effective resolution. Currently there was no effective and affordable dispute resolution mechanism available to parties involved in community schemes. The Bill would establish the Community Scheme Ombud Service to address this need, as a national public entity with executive authority vested in the Minister of Human Settlements. The Service would provide a framework for the avoidance and resolution of disputes in community schemes and the custody of community scheme governance documentation determined by the Minister of Human Settlements.

The Bill dealt with the establishment of the Service, its mandate and functions, its governing board and funding. The contents of the Bill outlined the procedure and scope of applications for relief made to the Service. It regulated the investigation of issues arising from applications for relief and the rights of parties to representation. It detailed the orders adjudicators may have taken in resolving community scheme disputes and the rights of parties to appeal against orders. It dealt with miscellaneous matters including public access to information in regard to orders and levies payable by community schemes.

Mr Ngwenya then explained the Bill briefly as he said it was critical to understand the purpose of the Service. Schemes referred to in the presentation document also included townhouse complexes, home owners associations and apartments. The body corporate regulated the rules and regulations to such schemes. People usually contributed a monthly levy, which was managed by the body corporate. The body corporate had responsibilities to provide certain services, such as maintenance and insurance, within the complex, and exclusive use areas such as swimming pools, were also the responsibility of the body corporate.

The home owners associations would also play a role by sharing the management or control of the entrance to an estate security complex. But problems arose when owners had disputes with the body corporate or between one another. Therefore, government needed to regulate the industry more stringently. The process needed to be simplified. This Bill would also help to change the rules of bodies corporate to accommodate living comfort for tenants and owners. The Community Schemes Ombud Service was set up to be an inexpensive dispute resolution mechanism to provide solutions to problems between tenants and bodies corporate.

Discussion
Mr R Tau (ANC, Northern Cape) thanked Mr Ngwenya for his explanation as it made things more practical. He highlighted that as this was a Section 76 Bill (legislation affecting the provinces), the provincial legislature also needed to be briefed. The example given by Mr Ngwenya was helpful but difficult to relay to the province. With regards to public hearings, there would not be a suitable community target as many people lived in rural areas and the idea of townhouses was not applicable to them at present, but perhaps only in the future.

Mr Kwezi admitted that the concept of townhouses was not familiar in all provinces, but it was good to inform the community for future purposes. The concept was similar to rental housing whereby two parties entered into a contract. The Rental Housing Act governed the relationship between landlords and tenants. People had to be informed of the ownership environment and the recourse for problems arising was that they did not have to go to court.  

Mr H Groenewald (DA, North West) congratulated the Department as this Bill was needed in South Africa. He was concerned about how the different Departments involved would come together cohesively and asked whether there was any legislation governing this process.

Mr Kwezi said that the consultation process between the two Departments was governed by the Constitution and both Departments were in agreement as to their respective roles and responsibilities regarding these Bills.

Mr M Jacobs (ANC, Free State) said that from the explanation received, he understood what was happening. With regards to public hearings, everyone in the community had to get involved. This Bill would help those people who signed lease contracts without consultation and ended up dissatisfied with their living conditions.

Mr D Feldman (COPE, Gauteng) wanted to know how the Ombuds Office would be funded.

Mr Morris Mngomezulu, Chief Director, National Department of Human Settlements said that the Service would be funded from fiscal policy for the first two years. From the third year, a review of funding would be done and the levies collected from the community schemes would help with further funding. Fees for services based on cost recovery would also help funding from the third year onwards.

Mr Jacobs (ANC, Free State) said that this Bill was addressing the issues of people living in suburbs. He wanted to know what recourse people in townships had.

Mr Mngomezulu said that although this Bill did not directly affect townships currently, the evolution of society was occurring at a rapid pace, therefore it could become applicable in the future. The problem with the shortage of housing in the country would result in many people migrating to housing schemes, partly due to security reasons as well. There was a gap market for people such as policemen, teachers and nurses who did not qualify for subsidies or bonds, and these people could benefit from migrating to rental housing schemes.

Mr Jacobs (ANC, Free State) asked whether people would be required to pay for services rendered since this Bill made provision for those who could not afford legal services.

Mr Kwezi explained that an exemption process would be put in place whereby the affordability of the complainant would be calculated and based on the result exemption would be granted to those people who could not afford the service.

The Chairperson said that having two Departments involved in the Sectional Titles Schemes Management Bill could become confusing and asked whether or not it would be better to have one Department in charge.

Mr Mngomezulu explained that the surveying and registration of land was the responsibility of the Department of Rural Development and Land Reform. This was their mandate and the Department could not take over their role. The Ombud Service was the responsibility of the Department of Human Settlements. This integrated approach by the two Departments and the difference thereof was informed by constitutional operatives.

The Chairperson said that there was a section in the community that was being ignored and these were traditional leaders. They formed part of the larger population and their role would need to be discussed and considered in the future as they played an important role in the ownership of land. Consultation and comments would be needed from them to see how their role would impact on these Bills.
 
The meeting was adjourned.