The Community Schemes Ombud Services Act 9 of 2011 (“CSOSA”) came into operation on 7 October 2016 and has dramatically altered the landscape in which community schemes operate in South Africa. Whilst this article is not aimed at providing a comprehensive breakdown of all of the changes brought into effect by CSOSA we have identified certain common questions with which we are faced on a regular basis and will deal with these.
- Does my scheme fall into the definition of “community scheme” under the Act?
A “community scheme” means any scheme or arrangement in terms of which there is shared use of and responsibility for parts of land and building. This definition is broad enough to cover inter alia:
- Sectional Title Development Schemes;
- A share block company;
- A Home Owner’s Association (however constituted);
- A housing scheme for retired persons; and
- A housing co-operative as contemplated in the South African Co-operatives Act, 2005.
- Does my “small” community scheme need to register with the Community Schemes Ombud Service (CSOS)?
There appears to be a common misconception that small community schemes are exempt from registering with the CSOS. This is however not the case. Under CSOSA every community scheme within the Republic must register with the CSOS. This means that even if your scheme only consists of 2 units you are still obliged to follow the registration procedure.
- What is the procedure to register my community scheme?
In terms of CSOSA all community schemes must register with the CSOS within 30 days of the date of the publication of the Regulations. Whilst this 30 day period has long since lapsed, we are not aware of any community schemes that have been punished as a result of their late registration (although this does not mean that the CSOS will not impose fines in the future for late registration or possibly charge interest on arrear levy contributions that should have been paid during the time when the scheme was not registered).
In our experience the procedure to register a scheme is relatively straightforward and the required form to register the scheme (form CS1) is attached to the Regulations and can be accessed on the CSOS website.
- What monthly contribution is payable to the CSOS?
In terms of Regulation 11(1) every community scheme must pay a levy to the CSOS on a quarterly basis. Importantly, every scheme has an obligation to make such payment regardless of whether or not a specific unit owner has paid the scheme levy or not. In instances where a unity owner has not paid, the scheme itself must use the normal debt collection mechanism to collect the levies from the defaulting unit owner.
Where the monthly levy in a community scheme is R500.00 or less, such scheme will be exempt from paying the CSOS contribution. Thereafter, the levy will be 2% of the monthly levy and capped at R40.00 per month. Therefore if a scheme has a monthly levy of R1400.00, the monthly contribution from each owner will be calculated as follows:
R1400.00 – R500.00
= R900.00 x 2%
= R18.00 (monthly contribution from each owner).
- I found my monthly levy too expensive before the addition of this new payment, are there any exemptions that could apply to me?
Where the owner of a section’s net income is less than R5500.00 per month, he or she is entitled to a 100% waiver of the monthly contribution. Such owner must however lodge a formal Application to the CSOS to validate such claim.
- What are the consequences of non – compliance with the provisions of the CSOSA?
Section 34(1) of the CSOSA provides inter alia that any person who-
(a) Fails to provide access to any books, accounts, documents or assets when required to do so under this Act;
(b) Fails to comply with a directive issued under this Act;
(c) Fails or refuses to give data or information, or gives false or misleading data or information when required to give information under this Act;
(d) Intentionally refuses to perform a duty or obstructs any person in the exercise of a power or performance of a duty in terms of this Act;
(e) Accepts any unauthorised fees or reward, either directly or indirectly as a result of a person’s position with the Service;
(f) Uses the name, logo or design of the Service without authority;
(g) Contravenes or fails to comply with Section 31; or
(h) Fails to comply with Section 11(1), (2) and (3),
Is guilty of an offence, and is liable, on conviction, to a fine or imprisonment for a period not exceeding five years or to both a fine and such imprisonment.
What one must note is that the individuals who will be held liable for such non – compliance are the Trustees or Executive Committee Members of the community scheme in question. Furthermore, in a Sectional Title Scheme with less than 4 owners of primary sections, all such owners are automatically made trustees without election.
By David Campbell