February 23, 2009
By Graham Paddock
Graham Paddock answers your questions about owning or living in a sectional title property.
Fair voting procedures
I live in a retirement village that is governed by the Sectional Titles Act and would appreciate your help in constructing an amendment to the rules of our body corporate.
As you know, the Act defines a "special resolution" as one that is either:
Passed by 75 percent of those present or represented at a general meeting; or
Agreed to in writing by at least 75 percent of all the members of a body corporate.
I wish to propose that in our retirement village only a physical document, duly signed by the eligible member(s) will comply with the condition "agreed to in writing".
A resolution to change certain rules in our complex was recently distributed to all members eligible to vote. Members were instructed to indicate – with a tick or a cross in the appropriate box on a voting form – whether they wished to retain or amend the existing rules. They were also advised that anyone who failed to return a voting form would be construed as having agreed to amend the rules.
Before distributing the forms and instructions, the trustees of our body corporate sought both legal advice and the opinion of a highly respected authority on sectional title.
Although I can’t change the Sectional Titles Act, I would like to change the rules of our body corporate. The current practice of counting anonymous votes, and even non-votes, as written agreements has two significant flaws:
There is no way of ensuring the integrity of a vote count. It is possible for members to vote several times to retain the rules, while, on the other hand, any vote that is "lost" automatically becomes a vote for change.
Because we are a retirement village, there will always be a high percentage of members who do not return a vote. Reasons might include absence, ill-health, depression, apathy or poor time management. Further, members in the process of buying or selling would not regard the submission of a vote as a priority.
In the resolution referred to above, there were 29 non-returns out of a possible 71. Assuming the same "non-vote" in future, it means that if 35 residents voted against change and only seven voted for change, change would be deemed to have been requested by 36 people, with only 35 against. Ordinary resolutions, such as increasing rates, could thus be railroaded through with ease.
It would be more reasonable to treat a non-vote as an abstention, which would effectively result in the retention of rules that applied when residents invested here and were often in better mental and physical health than they are now.
Name withheld on request
Graham Paddock replies: You do not need to amend the rules of your scheme. The situation you wish to achieve already exists.
The only circumstance in which the Sectional Titles Act allows an abstention from voting to be counted as a positive vote is for the purposes of a unanimous resolution, when a person who is present at a meeting and who chooses not to vote is counted as having voted for the resolution.
This rather clumsy "deeming" provision is necessary to enable bodies corporate to obtain "unanimous resolutions" that are not really unanimous in the sense that not all owners have voted for the proposal. But it does not apply at all to special resolutions and it can never apply to any resolution taken by written agreement.
Where voting is by way of the written agreement of owners, an "anonymous vote" or any "non-vote" cannot be counted. For special resolutions, votes have to be valued as well as counted. So it is necessary to know the identity of the person casting each vote so as to be able to allocate the appropriate value.
The statement by the trustees that a failure to return a voting form will be construed as a vote in favour of amending the rules is completely wrong.
You and any other owners who share your views should get some good legal advice and challenge the irregularly made rules.
Rethink rules on pets
Thank you for your response to my inquiry (Personal Finance, volume 34 here). At a special general meeting, rules on pets were passed and read as follows:
(a) Existing pets may be kept but no new pets may be introduced to the complex. Pets may not be replaced once they have passed away.
(b) Excessive noise, aggressiveness, fouling of common property or entering the swimming pool area by pets is not permitted. Dog owners are requested to dispose of faeces in a hygienic manner.
(c) Dogs taken for walks must be kept on a leash, and any faeces in the complex must be immediately removed/ cleaned up.
(d) Animals must be correctly cared for and provided for. Animal neglect or cruelty will not be tolerated, and the trustees reserve the right to take whatever action they deem necessary.
(e) The keeping of pets on common property is at the discretion of the trustees. Contravention of any applicable house rule or by-law may result in the withdrawal of such a privilege. Costs incurred by the trustees for the removal of any pet shall be for the owner of the pets concerned.
It was also noted at the meeting that it was no longer necessary to register the rules with the Deeds Office and that lodging the rules with the Deeds Office would now suffice. This is new to me.
I discussed the referral to pets and animals, and the chairman remained adamant that, because the Act refers to animals and pets are animals too, the wording would remain unchanged. His fellow trustees are in agreement with him. He stated further that the intention is to rid the complex of cats and dogs. My question is: why not state what you intend? He said I can keep my goldfish – should I get it in writing?
Do you see ambiguity in the rules? If so, does that mean that if a dispute arose a decision would go against the drafter of the rules – that is, the trustees?
Tony Vermeulen
Graham Paddock replies: My comments on the text of the rules are:
(a) The word "pets" is generally applied to domesticated animals, caged birds and captive reptiles. But it seems that the trustees want to prohibit any living thing being kept by an owner for the pleasure of its company or its appearance. So this wider term does apply to your goldfish. You do not need the chairman’s assurance that you can keep your goldfish because it is an "existing pet".
(b) The request to remove dog faeces is not appropriate; the obligation to do so is contained in (c). No indication is given of who will decide whether pet noise or aggression is "excessive".
(c) This rule requires that when dogs are "taken for a walk" they must be kept on a lead, but there is no statement that they cannot be let loose on the common property.
(c) The obligation to "correctly" care for animals, but not other types of pets, is so vague as to be meaningless, as is the statement that cruelty or neglect will not be tolerated. The statement that the trustees "reserve their rights" makes no sense.
(d) This rule implies that pets can be kept on the open common property, whereas pets are usually kept in sections or within enclosed exclusive-use areas. The references to "house rule" and "by-law" make no sense because very few sectional title bodies corporate have house rules and none of them have by-laws.
These rules are really badly drafted; your trustees need professional help.
Rules have never been "registered" at a Deeds Registry. They are lodged under cover of a notification by the trustees and are filed in the register for the scheme. The Deeds Office staff do not examine them or exercise any quality control.
Disclosure of extension rights
I recently bought a sectional title property. When I came to sign the transfer documents, the transferring attorney drew my attention to the fact that the sale agreement did not state what section 25 rights the developer held over the property and that, accordingly, I had the right to cancel the sale, even at that comparatively late stage.
According to the attorney, it is the seller’s responsibility (through his or her estate agent) to disclose what rights the developer who opened the sectional title register has to further develop or improve the property. A plan depicting the proposed developments/changes should be filed at the Deeds Office. Is it correct that failure to disclose section 25 rights is grounds for cancelling a sale? If so, sellers whose estate agents fail to do so could suffer considerable financial loss.
Mark B
Graham Paddock replies: The transferring attorney was absolutely correct. A failure to disclose a reservation in terms of section 25 of the Sectional Titles Act – the right to extend the scheme by the addition of further sections and exclusive-use rights – entitles the purchaser to annul the sale – in other words, declare it to be of no effect. This consumer protection provision is contained in section 25(15)(a) of that Act. In order to process the transfer, the transferring attorney had to draw your attention to the defect in the sale agreement and get you to elect not to annul the sale.
Graham Paddock is the head of Paddocks, a specialist sectional title firm. Paddocks offers training courses, publications, software and consultation services to a range of players in the sectional title industry.
This article was first published in Personal Finance magazine, 2nd Quarter 2008.See what’s in our latest issue
  
 
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