The Sectional Title Schemes Management Act (STSMA), which came into operation on 7 October 2016, has left many sectional title owners and managing agents confused, according to the South African Institute of Charted Accountants (SAICA). The Act is twinned with the Community Schemes Ombud Service Act (CSOSA). SAICA says it has been inundated with queries from sectional title owners and their accountants from all over the country.

The new Act (STSMA) is intended to regulate concerns surrounding levies, insurance, as well the maintenance and management of sectional title schemes.

So what’s causing all the fuss?

“Body corporates all over South Africa want answers on the new regulations,” says Juanita Steenekamp, project director: governance and non-IFRS reporting at SAICA. SAICA recently met the legal advisor of the newly established office of the chief ombud to get some clarity on areas within the legislation which are causing consternation.

In terms of the CSOSA the term ‘community scheme’ includes but is not limited to: sectional title development schemes (including holiday homes and office parks), a share block company (holiday homes), home owners or property owners associations, retirement homes and multi-unit dwellings (townhouses and apartments).

But there are several grey areas. “Body corporates are calling us because they don’t understand the CSOSA,” says Steenekamp. “Many are asking what is included in the definition of community scheme, for instance; does it include flats held in a share block, specifically at coastal areas? Does it include commercial buildings and conservancies?”

Payment of levies became effective from 7 January 2017 but many owners in community schemes don’t know what their levy is going to be yet. “Schemes need to collect the levy, which will be up to a maximum of R40, on a monthly basis and will pay that over quarterly,” says Steenekamp.

Is this simply another tax?

While taxpayers will fund the ombud this will be in their best interest says Steenekamp. “The legislation was enacted due to owners in body corporates having difficulty dealing with disputes. Previously the only option was going to court. The ombud will be a cost effective way to assist in resolving disputes.”

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