The modern Property Manager’s guide to body corporate (sectional title) compliance

Let’s face it: the world of Property Management is nothing like it used to be. New legislation has not only heaped a number of additional responsibilities onto Property Managers’ plates, it’s also seriously upped the stakes when it comes to staying on top of sectional title management compliance.

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The new rules are undoubtedly in the best interests of the schemes that they’re designed to protect, but they’ve caused their fair share of panic amongst the Property Management community. In fact, several well-respected businesses have ended up closing their doors because they were unable to meet the heavier workload imposed by compliance obligations for the same remuneration as before.

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Thankfully, overworked and underpaid, or out of work altogether, are no longer the only two options for Property Managers dealing with compliance challenges.

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Before we dive into the solution, however, let’s take a closer look at what the pertinent regulations are and how they affect day-to-day operations.

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A brief overview of the new Sectional Title legislation

First off, let’s clarify: when we say ‘new’ legislation, it’s not because the latest Property Management regulations are fresh off the promulgation line. The Sectional Titles Schemes Management Act and the Community Schemes Ombud Service Act have both been in place since 7 October 2016. In terms of real-world implementation and case law, however, they’re still in their relative infancy.

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Essentially, that means there are still a few grey areas, particularly around who takes final responsibility for ensuring a scheme’s compliance. As a Property Manager, it’s always best practice to operate under the assumption that the buck stops with you, even if that hasn’t yet been tested in court. (Rather safe than sorry.)

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Sectional Title Schemes Management Act (STSMA)

The Sectional Title Schemes Management Act (STSMA) deals with the establishment and operational requirements of Bodies Corporate managing sectional title communities and/or Home Owners Associations. It’s pretty comprehensive and complex (find a full copy here), but the most relevant changes affecting compliance obligations are as follows:

• New Reserve Fund: Bodies Corporate must establish a reserve fund to cover the cost of future maintenance and repairs to common property, accompanied by a 10-year maintenance plan. The reserve fund must be managed and reported on separately from the general administrative fund (a dual-budget setup that is beyond the capabilities of most traditional accounting software).
• Stricter controls on meetings and AGMs: Not only are there now more stringent requirements for minuting and timeously reporting on all meetings and AGMs, the STSMA has also implemented more structured voting procedures, and limited the number of proxies to two per Body Corporate member.
• Compulsory 3-year valuations and insurance updates: All sectional title schemes are now required to update their valuations every three years, as well as their all-risk insurance policies.

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Community Schemes Ombuds Service Act (CSOSA)

The Community Schemes Ombuds Service Act establishes the CSOS – or Ombud service – to assist in any disputes arising within sectional title schemes or Home Owners Associations, and oversee the governance of all communal residential complexes, including retirement and security estates. Again, the Act is pretty complex, but the main compliance-related changes are listed below. (If you’re looking for more detail, you can find the full Act on the CSOS website.)

• Stricter auditing & documentation: Strict controls have been put in place to ensure the compliant administration of community schemes, particularly when it comes to things like reserve funds. Annual submissions to the CSOS are now compulsory and must include complete financial audits as well as notifications of any amended scheme rules, trustee or directorship changes.
• New responsibilities for trustees and directors: To ensure “good governance”, all trustees, directors and any other scheme executives are now required to undergo training on scheme management and all applicable legislation relating to compliant governance.

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How does the sectional title legislation affect Property Managers?

To put it succinctly, the new sectional title legislation makes Property Management a lot more work. It’s not that good Property Managers weren’t already doing a lot of what the Acts now legislate – you just have to do it all in a very specific way, on a specific timeline, with unimpeachable documentation supporting all your actions and communications, now.

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Needless to say, that takes rather more time, effort and organisation than most Property Management businesses have been set up to handle. If you’re still not convinced, the list below shows a just small selection of the new responsibilities Property Management teams have under current legislation.

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Additional Property Manager responsibilities

• Take accurate and detailed minutes of every, single trustee meeting and make sure they are successfully distributed within two weeks of the meeting date.
• Timeously circulate the AGM pack (including agenda, previous minutes and financials) according to the community rules and legislation, and make sure the agenda meets its legislated requirements.
• Submit all the necessary documentation to the CSOS in good time after the AGM.
• Circulate the levy increase notice (with dispute resolution, interest rate declaration and details of amounts due) to all section owners, following the AGM.
• Organise a property valuation every three years, and keep track of this timeline to avoid falling behind on mandatory valuation and insurance cover updates.
• Manage the administrative and reserve funds as separate (but related) budgets, and make sure the trustees have consistent access to their latest budget reports and information.
• Acquire concrete proof of trustee approval for all expenditure when required.
• Retain all invoices and records in good order for audit purposes.
• Maintain an organised and reliable record of all official communications with clients.

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Challenges for Property Managers in the quest for compliance

There’s no getting around the fact that Property Managers have to comply with the new legislation. That means traditional workflows and processes need to be adjusted to accommodate the additional responsibilities listed above. This poses quite a few challenges, particularly for Property Management setups still working with the same old tools they’ve been using since they first opened their doors.

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New rules, old tools

A standard financial software package, word processor and simple PDF creator made up the toolset of champions back in the day. Now, the combination leaves a lot of cracks for compliance issues to fall through.

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Take Pastel, for example: it’s a fantastic accounting package, but it only allows transactions to be tracked against a single budget. Sectional title developments now have two budgets – the administrative and the reserve. Trying to manage those as separate projects for each and every sectional title development in your portfolio is possible, but it makes month-to-month reporting really time consuming, so most property managers end up only doing reports once a year. That significantly increases the risk of minor mistakes turning into major (non-compliant) discrepancies.

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Comprehensive reporting

Cohesive reporting is another issue the old software packages can’t address. Ever tried to compile data from a Word document, a PDF and a Pastel project into a single, competent report? The process falls somewhere between “no fun at all” and “absolutely impossible”.

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That’s a big problem when the compliance status of the sectional title developments you’re managing relies on submitting these kinds of reports to the CSOS. (Not to mention the fact that you’re legally required to make sure the data they contain is available to trustees at all times.)

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Siloed workflows

A common response to the increased workload under new regulations is to create separate departments within your Property Management practice to handle each aspect of the job. This may seem like a great way to streamline your processes, increase efficiency and minimise costs. In practice, however, these departmental siloes make it extremely challenging to coordinate and control all the moving parts.

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With each department using their own platform and tools to perform their various roles, it’s almost impossible to get a complete overview of your scheme’s progress and compliance status. The lack of transparency also makes it tough for departments to collaborate on interrelated tasks, making quality control and accountability a real struggle for portfolio managers.

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Information loss

If opaque departmental siloes weren’t enough, things get even more complicated for Property Management teams when key staff members leave, taking a huge amount of important information with them. Questions like “How far along are these tasks?” or “When were these documents submitted?” or “Where did you store these communications or invoices?” are very difficult to answer when the person responsible for them has exited stage left.

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From a compliance perspective, this is a sure-fire recipe for disaster, not only because important documentation is often lost. Responsibilities that are second nature to the exiting staffer are easy to forget during handover, causing compliance gaps that may not be picked up until it’s too late to rectify the damage.

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The (surprisingly simple) solution

By now, you’re probably thinking, “Okay, I get it, Property Management today is tough”. Chances are you knew that already, or you wouldn’t be reading this article.

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What you may not have known is that there is a solution available to the South African market that answers each and every one of the compliance challenges posed by the new sectional title legislation, plus a whole lot more.

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Built by South African Property Managers, for South African Property Managers, WeConnectU’s Community Management Solution is a modern Managing Agent’s secret weapon. If you’d like to explore all of its capabilities, we’d suggest that you book a demonstration. For now, let’s take a look at WeconnectU’s compliance benefits, below.

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A single platform for everything

One of the biggest strengths of WeconnectU is that it brings all the processes associated with Property Management together on a single, central, intuitive platform. No more bouncing between your financial software package, Word, Adobe and Excel, leaving cracks for compliance gremlins to slip through – WeconnectU provides all the tools you need to do your job, purpose-built for the task, as part of its cohesive property management ecosystem.

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To give you some idea of its capabilities, here are a few of WeconnectU’s key features:

• Comprehensive, custom-built financial solution
• Compliance planner & checklist
• Task management
• Transfer tracking reporting
• Categorised bulk communications
• Meeting management & voting
• Community rule enforcement
• Document storage
• Trustee & home owner login
• Pre-legal debt collecting process
• Online payment approval
• Intelligent management dashboards

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Complete transparency

The centralised structure of WeconnectU removes the procedural and technological barriers of mismatched software suites, and dramatically improves transparency, efficiency, and effective interdepartmental collaboration. This makes it far easier to ensure compliance is maintained across all workflows at all times – particularly since managers, business owners and trustees have access to a complete compliance overview via WeconnectU’s comprehensive intelligent dashboards.

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Easy compliance status monitoring

WeconnectU’s dashboards are a powerful tool for monitoring and reporting on the key aspects of sectional title compliance. Drawing data from all the relevant departments, they present a comprehensive and up-to-the-minute overview of a scheme’s compliance status. The system also allows for secure, external logins to let credentialed trustees and directors check in on progress (and access relevant documentation) at any point in time.

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Built-in compliance planner & checklist

WeconnectU doesn’t just let you keep tabs on how compliant your schemes are; it also proactively assists your team in meeting their compliance obligations. The built-in compliance planner ensures that managers are informed of the steps they need to take and when they need to take them, and the compliance checklist makes sure nothing gets missed along the way.

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Secure, cloud-based data storage

Speaking of missing things, WeconnectU also helps prevent loss of information by ensuring project records, documentation, communication and progress is tracked and stored securely in the cloud. That means no losing information when staff members leave, and no panicking about lost laptops, malfunctioning hardware, or downtime during office moves. All your data is centrally stored and secured with the best cloud redundancies and encryption and is accessible 24/7.

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…but wait, there’s more!

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There’s no doubt that WeConnectU is the easiest way to effectively and affordably achieve sectional title & HOA management compliance, but there is so much more to the platform than just compliance tools. To find out more about how WeconnectU can give your Property Management business the edge it needs to thrive in this increasingly challenging industry, get in touch with James on james@weconnectu.co.za or visit weconnectu.co.za.