SA Body Corporates - Keep Tabs on your Sectional Title’s Financial Affairs
Moving into a sectional title complex is viewed by some as a heaven-sent opportunity. There’s no grass to mow, no beds to weed, general maintenance is taken care of and balancing the books is left to those in the know.
It all sounds pretty idyllic until something goes wrong and, regardless of how much money you believe is in the complex’s coffers, every unit owner needs to keep an eye on the way things are run to ensure that the accounts are kept in the black.
People often regard the body corporate and the owners as different entities when, in actual fact, they are one and the same. While owners in a sectional title scheme will appoint trustees to oversee the day-to-day running of the complex and financial responsibilities, it is in everyone’s best interests if others keep an eye on the financial affairs of the complex, ensuring that everything is above board at all times.
The financial affairs of many sectional title complexes have borne the brunt of the recession. When times are tough, many homeowners forego their levies, believing that they will be able to catch up when their financial situation improves. It’s a bit of a slippery slope and not only are homeowners finding it more difficult to get out of debt, they are also finding that bodies corporate are not willing to sit back and do nothing about the situation. They simply can’t afford too. Bad debts aside, even the most flush sectional title scheme can run into trouble if the budget is not prepared properly.
Sectional title schemes do sometimes go awry and when this happens the situation can very quickly become an exercise in finger pointing and accusations. What needs to be remembered is that regardless of who has caused the trouble, all the homeowners in the scheme are going to be held liable for any debts incurred. Raising a special levy to pay for an improvement is one thing, demanding that owners pay extra to cover a debt that has not been budgeted for is quite another. The effect, particularly on an already cash-strapped household, can be catastrophic.
The day-to-day running of a sectional title complex can be compared to running a business. Checks and balances must be put in place and it is up to the homeowners themselves to see that the books are in order.
While it is important that owners ask to see the financials two or three times a year, it is vital for those who have a vested interest in a sectional title scheme to attend meetings. If they can’t attend, they should arrange for someone to represent them. This is particularly important if the owner is an absentee landlord.
Many people do not want to become actively involved as trustees and become caught up in the day-to-day running of the scheme. This doesn’t mean that they should ignore the body corporate or what it does completely. It is your responsibility as a homeowner to not only get involved, but to air your views if you are concerned about the way things are being run.
Article By Lea Jacobs