What Community Schemes need to know about the CSOS Act

The rise in residential estates and other forms of communal living across South Africa has resulted in an increased need for dispute resolution. Disputes among community schemes (like bodies corporate or home owners’ associations) or trustees and homeowners, or between residents themselves are rife in communal living situations. In a first for South Africa, the Community Schemes Ombud Service Act 9 of 2011 (“the Act”) was promulgated.

What is CSOS and the Act?

CSOS stands for the Community Schemes Ombud Service. In terms of the Act, the Service was established. Its function is to:

• regulate, monitor, and quality assure scheme governance documentation;
• develop and provide a dispute resolution service;
• provide training for conciliators, adjudicators, and other employees of the Service; and
• take custody of, preserve and provide public access electronically or by other means to scheme governance documentation.

The CSOS Act is a valuable tool for community schemes because it provides a dispute resolution mechanism and ensures good governance. The Act defines community schemes, amongst others, as “any scheme or arrangements in terms of which there is shared use of and responsibility for parts of land and buildings, including but not limited to a sectional title development scheme, a share block company, a home or property owners’ association”. The following are some of the most important information you need to know about the CSOS Act.

What types of disputes are covered in the Act?

• Financial issues
• Behavioural issues
• Scheme governance issues
• Meetings
• Management services
• Works pertaining to private and common areas

An application to be lodged with an Ombud must be made. Section 38 (1) of the Act provides for locus standi with regards to parties who may approach the Service. It indicates that any person who is a party to or affected materially by a dispute may make an application for adjudication of a dispute. This means that the party making the application must have an adequate material interest in the issue to proceed.

Those who apply to the Service to have a dispute resolved will need to pay an application fee of R50.00. Should the matter escalate further, adjudication fees are set at R100.00. People who have a net household income under R5,500.00 will not need to pay the application and adjudication fees.

How are disputes settled?

Conciliation: Wherever possible, the Ombud attempts to get parties to settle their disputes. Constructive dialogue with the conciliator is promoted in order to come to a resolution.

Adjudication: If conciliation fails, the Ombud must refer the application to an adjudicator. The adjudicator hears each party’s side of the story, evaluates their evidence and settles the dispute in the form of a written order.

What else does the Service do?

Aside from dispute resolutions, the Service exists to:

• Provide training for its conciliators, adjudicators and other employees.
• Regulate, monitor and control the quality of all scheme governance documentation.
• Take custody of, preserve and provide public access electronically or by other means to scheme governance documentation.

As part of this the Service needs to:

• promote good governance of community schemes;
• provide education, information, documentation and such services as may be required to raise awareness to owners, occupiers, executive committees and other persons or entities who have rights and obligations in community schemes;
• monitor community scheme governance; and
• deal with any other matters to do with the Act’s objectives.

How is the Service funded?

The Act features information on the funding of the Service. Money that has been appropriated from Parliament forms part of the Service’s funding, alongside levies that are collected from Community Schemes, and application and adjudication fees payable by those making use of the Service. Community Schemes are required to collect a levy from their members, which is to be paid to the Service on a quarterly basis.

Community Schemes are also required to file annual returns and copies of their financial statements with the Service, and they’re also required to have fidelity insurance, in case there is any fraud or dishonesty from anyone who has access to the scheme’s funds, for example managing agents or employees.

Conclusion

The Act aims to promote good governance in Community Schemes and, in so doing, provides a clear outline and definition of how schemes should work and who is responsible for what. The Act also makes provisions for dispute resolution for a range of issues that can occur in Community Schemes. The Act is a first for the country to make sure that the various Community Schemes in South Africa are regulated and fairly governed.

About Propell
Propell offers loans and credit for body corporates and sectional title schemes. We’re in the relationship business. Relationships, just like property, need to be constantly maintained and improved. This is the only way to build trust, which we’ve been doing for over 20 years. Professional and approachable, we speak openly and honestly and welcome the same from our customers. As a business, our value lies in working with our clients to solve their problems.

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