If a good managing agent is not involved or if the agent or trustees of a sectional title scheme are too willing to give way to pressure from members, the essential building up of reserves by bodies corporate is often not undertaken, says Michael Bauer of the property management company IHFM.
“In these circumstances, important maintenance tasks tend to be neglected. Trustees anxious to please the owners will often try to budget low and limit levy increases – but the inevitable consequence of this is that regular maintenance is neglected and when the project requires a fairly large repair or maintenance task the funds are simply not there and a special levy needs to be raised,” says Bauer.
“Many schemes will require large sums at some stage, such as for lift maintenance or water proofing repairs. Plumbing and electrical faults may also call for substantial outlays. Where reserves have been built up this is likely to be no problem, but where levies have been kept low it will be necessary to raise a special levy – and this very often causes resentment among members.”
He says special levies can be imposed by trustees without approval to the owners. In practice, however, any large outlay for repairs requiring a special levy will usually be preceded by a special resolution meeting to gain the owners’ approval.
When he is called in as a managing agent, says Bauer, often his most difficult task is to point out to trustees the problems that are likely to arise and to convince them that regular levy increases and the building up of reserve funds are essential.
“One of the factors that has to be taken into account,” says Bauer, “is that the units in any scheme on which large repair bills are outstanding will lose value fast, because the building will not look as good as it should and because potential buyers will check the look of the building and the account books before they buy.”
IHFM has a free weekly online newsletter covering sectional title and property matters. Call Michael Bauer on 083 255 4442 or visit www.ihfm.co.za.
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