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LUXURIOUS AND NON-LUXURIOUS IMPROVEMENTS BY BODY CORPORATES IN TERMS OF THE SECTIONAL TITLE ACT NO. 95 OF 1986

Release Date : 13 Dec 2011
 

LUXURIOUS AND NON-LUXURIOUS IMPROVEMENTS BY BODY CORPORATES IN TERMS OF THE SECTIONAL TITLE ACT NO. 95 OF 1986

 

Annexure 8 of the Management Rules of The Sectional Titles Act (Rule 33) deals with the question of improvements.  Here, a distinction is drawn between luxurious and non-luxurious improvements. Different rules apply depending on the nature of the improvements.

 

Firstly, we need to know what constitutes a luxurious improvement and what constitutes a non-luxurious improvement:-

 

What is a luxurious improvement?

 

The word “luxurious” is derived from the word “luxury” The definition of “luxury” is “(i) a state of great comfort and extravagant living” and/or “(ii) a non-essential item”

 

Using this definition we can conclude that a luxurious improvement is a non-essential item, with the emphasis being on the words “non-essential”.

 

What is a non-luxurious improvement?

 

The prefix “non” is an expression of absence or negativity.

 

This leads us to the conclusion that a non-luxurious improvement can be regarded as being both essential and desirable (in the sense of being luxurious for some and not others).

 

What procedures are needed if the body corporate wishes to undertake one or the other of these improvements?

 

Luxurious improvement

 

The Trustees may effect a luxurious improvement if the owners (members of the body corporate) by unanimous resolution resolve to undertake a luxurious improvement on the common property.

 

 

Non-Luxurious improvement

 

In the event of the Trustees wishing to effect a non-luxurious improvement to the common property, notice of this intention shall be given in writing to all members which notice shall confirm the trustees intention to proceed with the improvement after the lapse of 30 days from the date of posting of the notice.

 

 

 

 The notice shall provide the following details of the improvement:

 

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i)the cost of the improvement;

 
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ii) how it is to be financed and the effect this will have on the levies; and
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iii) the need, desirability and effect of the intended improvement

 

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Any owner may within the 30 day period request in writing that the Trustees  convene a special general meeting in order that the owners may consider and deliberate on the proposed improvement and at which meeting the owners may approve, with or without amendment, such proposal by way of a special resolution.

 
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In the event of there being a request for the special general meeting, the Trustees shall not proceed with the proposed improvement until such meeting has been held, and the Trustees shall be bound by any special resolution adopted at this meeting.

 

 

Having set out the definitions, rules and procedures let’s deal with the example of whether a swimming pool as a proposed improvement can be regarded as a luxurious or non-luxurious improvement:

 

If the profile of the members of your body corporate can be classified as being affluent, then the definition of luxurious improvement does not apply, as at that level of wealth, a swimming pool can be regarded as a non-luxurious improvement. In this case the procedures in respect of a non-luxurious improvement need to be followed.

 

If, on the other hand, the profile of your members is say, “middle income group”, then the installation of a swimming pool must be regarded as a luxurious improvement and an unanimous resolution is required.

 

 

DIFFERENCES BETWEEN SPECIAL AND UNANIMOUS RESOLUTIONS

 

UNANIMOUS RESOLUTION         SPECIAL RESOLUTION

TAKEN AT A MEETING                  TAKEN AT A MEETING

A.

 

1. NOTICE: 30 Days Notice specifying the proposed resolution

A.

 

1. NOTICE: 30 Days Notice specifying the proposed resolution

2. QUORUM: 80% Quorum (in number and value) meaning that not only must 80% of the total number of owners in the scheme attend the meeting, but also that the participation quotas of these owners must represent at least 80% of the total quotas in the scheme.

2. QUORUM: As per general meeting quorum

3. VOTING: All present must vote in favour of the resolution. An abstention is regarded as a vote in favour.

3. VOTING: 75% of all present or represented in number and value must vote in favour of the resolution.

4. OVERTURNING THE VOTE: If any person present at the general meeting votes against the resolution the motion will not be carried.

BODY CORPORATE may approach court if unable to get unanimous resolution

4. OVERTURNING THE VOTE: N/A

5. OTHER REQUIREMENTS: If an owner's proprietary rights are affected by a proposed resolution that owner must give written consent.

5. OTHER REQUIREMENTS: If an owner's proprietary rights are affected by a proposed resolution that owner must give written consent.

 

 

B. REQUIREMENTS FOR TAKING UNANIMOUS RESOLUTION IN WRITING WITHOUT A MEETING: A unanimous resolution can be obtained by all owners agreeing in writing. A draft written resolution is sent around to all owners or their representatives to sign and once signed by all owners it is taken as being agreed to.

B. REQUIREMENTS FOR TAKING SPECIAL RESOLUTION IN WRITING WITHOUT A MEETING:

 A Special resolution can be obtained by three-quarters of owners in number and value agreeing in writing. A draft written resolution is sent around to all owners or their representatives to sign.

 

 (Written by Lara De La Querra)

 

 

 

 

 

 

 

 


Written by: Lara De La Querra