Useful Sectional Title terms - Part 1

Category Property Management

Useful Sectional Title terms - Part 1
Article by Kerry Olivier - ANGOR Property Specialists

Residential Sectional Title Scheme
A residential building or group of buildings where owners own "sections" of the building. Example: Block of flats or apartments; Townhouse Scheme.

The internal space of the unit consisting of the windows, doors, ceiling and floors.

Sectional Plan
This is an actual drawing or plan of the Scheme, showing all the buildings and the land which form part of the Scheme.  On the plan, the position and size of each unit is clearly marked, as well as any exclusive use areas which belong to each unit.

Exclusive Use Area
Part of the common property that can only be used by a specific owner or group of owners. Example: Allocated parking bays, private garden areas.

Common Property
Areas of the Scheme or building that are shared by everyone. Example: Driveways, passages, staircases, lifts, unallocated parking bays, gardens, communal swimming pool, and the external walls of a building.

Body Corporate
The legal entity made up of all the owners of the Sectional Title Scheme (every owner is a member of the Body Corporate).

Owners, or non-owners, who have been elected by the Body Corporate to manage/ administer the Scheme, and to make decisions on behalf of the Body Corporate regarding the day-to-day running of the Scheme. Also referred to as Scheme Executives.

Managing Agent
A company who assists the Trustees in the day-to-day running of the Scheme, but who cannot make decisions concerning the Body Corporate without the approval of the Trustees.

Participation Quota (PQ) is the formula used to calculate each owner’s contribution, as well as determine the owner’s undivided share of the common property and the value of his / her vote at general meetings.
Example: A 90m² section in a Scheme with an overall size of 2250m² (all m² of all the sections added together) has a participation quota value of 0.0400 = 4% share of the levies (90 ÷ 2250 = 0.0400).

Contribution (Levy)
A monthly payment that all owners in a Sectional Title Scheme must pay to the Body Corporate to cover the expenses of the common property of the Scheme. 
Examples of expenses: Complex security, building and garden maintenance, common property water and electricity, as well as insurance over the structure of the sections. 

Special Contribution (Special Levy)
A contribution raised to cover the cost of an emergency expense not included in the annual budget. A special levy is raised when the Scheme's reserves are not sufficient to cover the emergency expense.
Example: Emergency repairs not covered by insurance and not budgeted for: leaking water pipes and lightning damage.

Maintenance, Repair and Replacement Plan (MR&R Plan / 10 Year Plan)  
A plan for the expected / foreseeable maintenance within a Scheme for the next 10 years.  The plan is to list the major capital items, their current state, their projected lifespan and the estimated cost of repair or maintenance of the item. 
Although an external contractor may be used to draft the plan, the responsibility to ensure that it is indeed in place and budgeted for, lies with the Trustees. 

Maintenance Reserve Fund (MRF)
The budget for this reserve fund must be approved by the members, who may specify conditions for payment of money from the reserve fund.
Prescribed Management Rule (PMR) 22(4) provides that the Trustees MUST report, at each AGM, the extent to which the approved MR&R plan has been implemented.

Maintenance Reserve Levy (MRL)
A levy raised to cover future maintenance of all major capital items within the Scheme. Example: Gym, swimming pool, rethatching of roofs etc. The amount will be included in the budget, and voted on at the AGM or SGM.

Author: Kerry Olivier - ANGOR Property Specialists

Submitted 08 Jun 18 / Views 5219