Body Corporate and HOA Management

Frequently asked questions

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What is PQ and how is it calculated?

Each section has a participation quota based on the measured floor area of that section in relation to the total floor area of the building. The participation quotas are shown as percentages to four decimal places.

The participation quota of a section determines the:

Size of a section’s share in the common property.
Value of the vote exercised by the owner of a section; and
Share of contributions payable by that owner.

What is defined as an Exclusive Use Area (EUA)?

Exclusive Use Area means a part or parts of the common property for the exclusive use by the owner or owners of one or more sections.

An exclusive use area is:

Always common property
Always owned in undivided shares by the owners of all sections
Reserved for use by one owner or an identified group of owners

Who is responsible for the maintenance of an EUA?

In terms of Section 13(1)(c) of the STSM Act, an owner is not obliged to maintain or repair any exclusive use area to which he or she holds rights, the owner is only obliged to keep it clean and neat.

The body corporate is responsible for the maintenance and repair of exclusive use area but must recover all maintenance and repair costs from the owner who is entitled to the exclusive use rights.

Who is responsible for the maintenance of geysers?

Prescribed management rule 31(1) provides as follows:

Notwithstanding that a water-heating installation forms part of the common property and is insured by the body corporate, a member must maintain, repair and, when necessary, replace such an installation which serves that member’s section or exclusive use area; provided that where such an installation serves sections owned or exclusive use areas held by more than one member, the members concerned must share the maintenance, repair and replacement costs on a pro-rata basis. The cost of repair/replacement will be covered under the body corporate insurance.

Burst pipe in wall – who is responsible for repair and resultant damages?

It must first be determined whether it is a common pipe or secondary pipe serving a unit. Common pipes, including a pipe on the common property that only serves a particular unit, will be the responsibility of the body corporate to repair, including any resultant damage and will in all probability be covered under the body corporate insurance. A leak from a secondary pipe within the boundary of the unit, for example a shower waste pipe, will be the owner’s responsibility to repair as well as any resultant damage to his unit and any other neighbouring unit as well. That is why it is imperative for owners to also have their own insurance policies in place to cover these eventualities.

Who can be appointed as a Trustee?

In terms of PMR 6, anybody can be a trustee, need not be an owner. Anybody employed by the managing agent or by the body corporate may not serve as a trustee. If the person is an employee of the managing agent or the body corporate and he/she owns a unit in the scheme, only then can they be considered as a trustee.

When is a Special Resolution required?

A special resolution requires a majority of 75% of member votes, calculated first in the number of votes and secondly in the value of member votes cast.

A special resolution is the type of member agreement required for a range of important decisions:

Sue the developer;
Insure against additional risks;
Purchase or otherwise acquire units;
Borrow money;
Short lease of common property to owners and occupiers;
Cancel registered exclusive use rights;
Approve servitudes or restrictive agreements;
Approve section extensions;
Make or change conduct rules;
Create and confer exclusive use rights in terms of a conduct rule;
Pay member trustees;
Appoint an executive managing agent;
Cancel management contract on two months’ notice;
Approve a necessary improvement if a meeting is requested; and
Approve body corporate installation of pre-paid meters on common property;
Make rules altering vote values or contribution liability.

When is a Unanimous Resolution required?

A unanimous resolution’ means a resolution—

(a) passed unanimously by all the members of the body corporate at a meeting at which—
(i) at least 80% calculated both in value and in number, of the votes of all the members of a body corporate are present or represented; and
(ii) all the members who cast their votes do so in favour of the resolution; or
(b) agreed to in writing by all the members of the body corporate.It is required for a range of decisions that have very significant effects on members or the body corporate:

Alienate or long lease of common property;
Extend the period in which the developer has the right to extend the scheme;
Create and confer registered exclusive use rights;
Create and confer exclusive use rights in terms of a management rule;
Change the management rules;
Distribute compensation for expropriation of common property if fairness of distribution by PQ challenged;
Deem the building destroyed;
Authorise rebuilding or transfer of interests when building deemed destroyed;
Make loans from body corporate funds; and
Authorise unnecessary improvement to the common property.

How much is required to be allocated towards the MRR fund in the annual budget?

For the purposes of section 3(1)(b) of the Act, the minimum amount of the annual contribution to the reserve fund for a financial year being budgeted for, other than the financial year budgeted for at the first general meeting referred to in section 2(8) of the Act, must be determined as follows:

If the amount of money in the reserve fund at the end of the previous financial year is less than 25 per cent of the total contributions to the administrative fund for that previous financial year, the budgeted contribution to the reserve fund must be at least 15 per cent of the total budgeted contribution to the administrative fund;
if the amount of money in the reserve fund at the end of the previous financial year is equal to or greater than 100 per cent of the total contributions to the administrative fund for that previous financial year, there is no minimum contribution to the reserve fund; and
Create and confer registered exclusive use rights;
if the amount of money in the reserve fund at the end of the previous financial year is more than 25 per cent but less than 100 per cent of the total contributions to the administrative fund for that previous financial year, the budgeted contribution to the reserve fund must be at least the amount budgeted to be spent from the administrative fund on repairs and maintenance to the common property in the financial year being budgeted for.

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Body Corporate and HOA Management

Have Additional Questions?

Handling Every Aspect of Property Management

Got Questions? We’ve Got Answers

What is PQ and how is it calculated?

What is defined as an Exclusive Use Area (EUA)?

Who is responsible for the maintenance of an EUA?

Who is responsible for the maintenance of geysers?

Burst pipe in wall – who is responsible for repair and resultant damages?

Who can be appointed as a Trustee?

When is a Special Resolution required?

When is a Unanimous Resolution required?

How much is required to be allocated towards the MRR fund in the annual budget?

Let’s Make Your Operations Work Smarter

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