THE 7 OCTOBER 2020 WILL MARK THE FOUR-YEAR ANNIVERSARY OF THE GAZETTING, PUBLISHING AND SO EFFECTIVE DATE OF BOTH THE COMMUNITY SCHEMES OMBUD SERVICE ACT (ACT 9 OF 2011) AND THE SECTIONAL TITLE.
Schemes Management Act, no. 8 of 2011; maintenance oversight per (now) legislative direction linked to financial management arguably the biggest implication of said legislation but, where are we close to four years post implementation of the legislation?
Practically, the market has been slow to embrace both the requirements and intent of the legislation insofar as maintenance oversight is concerned and directed, the theory of which is difficult to argue. Regulation 22 makes it mandatory for all sectional title schemes to prepare written maintenance, repair and replacement plans for the common property detailing, inter alia, the costs of repair and replacement for all capital items as defined over a (practically rolling) ten-year term to be presented to, and approved, by members at the annual general meeting.
Financial management, historically left to (practically) the sole discretion of scheme executives for better or worse, now falls directly within the ambit of the legislation which links the now legislatively required maintenance plan to schemes’ Reserve Levies with the Administrative Levies being far more simplistic in computation and determination, same to simply meet the estimated annual / monthly operational costs; the simple theory of the legislation being that the Reserve Levy is set to fund the required maintenance works over term, but how does theory translate to practice?
My research, and until very recently practical experience, suggests that only marginally more than half of all schemes have even fulfilled the obligations and requirements of Regulation 22, that being have prepared the now legally required maintenance plans; of those that have, only a small fraction actively manage the scheme’s maintenance in accordance with the plan(s) and as directed by Regulation 22, and that is before we consider that there are plans, and then there are plans!
It is evident that the focal point is and continues to be on bland compliance alone, driven with varying degrees of success as is evidenced by the numbers referred to above, by largely managing agents to tick the proverbial box and to satisfy the ever increasing burden of legislation policed by ever diminishing and capable oversight, but this misses the point and intent of the legislation which is sound in theory.
It is my view that only the market will correct the above, when prospective owners actively and critically assess reserve budgets and associated funds available, the directing maintenance plan and management thereof and, critically, both managing agents and scheme executives accept that maintenance should be managed professionally and are prepared to meaningfully engage with specialists in the field.