Owners often ask the same questions: Why does the body corporate need a ten-year maintenance plan if it already has an annual budget? Why is there a reserve levy? Why am I paying an EUA levy as well as a normal levy? If a parking bay or balcony is “mine”, why is it still common property? And if water enters my unit from a balcony or external wall, who pays?
The starting point is to identify the area legally, check the sectional plan and rules, establish the cause and determine how the expense should be funded.
1. The 10-Year Maintenance, Repair and Replacement Plan
The 10-year maintenance, repair and replacement plan (“10YMP” or “MRRP”) is required by the Prescribed Management Rules. It identifies major capital items of common property likely to require maintenance, repair or replacement over the next ten years, their condition, expected timing, estimated cost and anticipated lifespan.
Its importance is practical: buildings deteriorate whether a body corporate plans for it or not.
Assume a roof will need replacement in five years at an estimated R1.5 million, while only R300,000 has effectively been accumulated. A functioning MRRP exposes the R1.2 million shortfall early and allows the scheme to build funding into its reserve planning. Without it, year five may arrive with a leaking roof, R300,000 available and an urgent R1.2 million problem.
The MRRP is the plan; the reserve fund is the money accumulated to implement it; and the reserve contribution is what owners pay towards that fund. The plan should be reviewed annually, and sooner if prices, conditions or technical information materially change.
2. Insurance Valuations
Insurance valuations answer a different question. The PMRs require a replacement valuation of the buildings and improvements the body corporate must insure at least every three years.
Replacement value is not market value. A unit that could sell for R3 million does not necessarily cost R3 million to rebuild. The valuation considers reinstatement cost following insured loss.
Put simply: the insurance valuation asks, “What would it cost to replace the insured property?” The MRRP asks, “What work is coming over the next ten years and how are we preparing to fund it?”
3. What Are Owners Paying For?
An owner’s monthly account may include:
· Administrative contribution: current operating expenses such as security, cleaning, insurance premiums, common utilities and administration.
· Reserve contribution: future maintenance, repair and replacement of common property.
· CSOS levy: the statutory levy payable to the Community Schemes Ombud Service.
· EUA contribution: additional expenditure properly attributable to an exclusive use area.
· Special contribution: additional funding where necessary expenditure was not adequately provided for in the approved budget.
4. Exclusive Use Areas: Use Is Not Ownership
An exclusive use area (“EUA”) is part of the common property over which a particular owner has exclusive use. Typical examples are parking bays, gardens, patios and balconies.
Exclusive use does not automatically mean ownership. A registered EUA may constitute a limited real right over common property; a rule-based EUA creates an exclusive-use entitlement through the scheme’s rules. Neither turns the area into part of the owner’s section.
If Unit 8 has exclusive use of a parking bay, every slab, column, waterproofing layer, wall and drain beneath or around it does not suddenly become Unit 8’s private property.
EUAs may be created through formal registration under section 27 of the Sectional Titles Act, or through properly adopted management or conduct rules under section 10 of the STSMA. Historical use alone is not enough: a parking bay does not become a valid EUA merely because the same owner has used it for twenty years.
5. EUA Contributions, Double Charging and Ring-Fencing
Section 3 of the STSMA provides the statutory basis for additional EUA contributions. The trustees have discretion to determine an amount estimated to meet relevant EUA expenses, subject to reasonableness, a defensible basis, proper resolution and notice.
A rule is not a prerequisite to charging an EUA contribution. Good rules are nevertheless best practice because they can state what the owner maintains, what the body corporate maintains and which costs may be recovered.
The trustees’ discretion is not unlimited. Nor may the same expense be recovered twice.
In Baxter v Ocean View Body Corporate,[1] the rules already made EUA owners responsible for certain balcony maintenance, yet those expenses were also included in the EUA contribution. The High Court held that the same costs could not simply be recovered again.
Ring-fencing is therefore important. It does not necessarily mean a separate account for every bay or garden. The body corporate should be able to identify what was collected, why and how it was used.
Assume an owner pays an EUA contribution for ten years and is then billed the full cost of a major repair. The obvious question is: what happened to the money already collected?
In Kelston Body Corporate v Bougainvillea Property Investment,[2] EUA contributions had been collected but were not properly allocated to the intended maintenance and were used for general operating expenses. The later attempt to recover repair costs from the owner failed. If a body corporate charges EUA contributions, it should be able to account for them.
6. Who Maintains and Who Pays?
The general starting points are:
· An owner maintains the owner’s section.
· The body corporate maintains common property.
· An EUA remains common property, but cost allocation must be considered with section 3 and the scheme’s rules.
· Owner-installed improvements will often remain the owner’s responsibility, particularly where approval imposed that obligation or the alteration caused the defect.
· Boundary components such as windows, doors, walls, floors and ceilings require the sectional plan and rules to be checked.
· Consequential damage inside a section is a separate enquiry involving causation, insurance and, where relevant, negligence.
Importantly, the place where damage appears is not necessarily the component that failed.
If water enters Unit 5 below Unit 6’s EUA balcony, the answer is not automatically “Unit 6 pays”. The cause could be owner-installed tiles, an obstructed drain, a common-property waterproofing membrane, structural slab, external wall or shared drainage.
The source must be identified first. A body corporate may be responsible for repairing a common-property source without automatically being liable for every damaged cupboard, ceiling or floor inside the section.
Before allocating an invoice, trustees should identify the legal area, check the sectional plan and rules, establish the physical cause, investigate alterations and approvals, check insurance, review the MRRP and reserve budget and, where an EUA is involved, account for historical contributions.
Good scheme management is preparation: knowing what must be maintained, who is responsible, what is coming and how it will be funded.
“The time to repair the roof is when the sun is shining.”
— John F. Kennedy
About the Author - Razeen Khan is an attorney and managing director at KKS Attorneys Inc., with vast experience in sectional title and community scheme law, wider property law, conveyancing, commercial law, intellectual property law and alternative dispute resolution. He regularly advises trustees, managing agents and owners on sectional title disputes and its many concepts and permutations. His approach is practical and solution-focused, with an emphasis on clear legal interpretation and workable outcomes for parties and clients.
