When purchasing a sectional title property for the first time, it’s easy to focus only on the property itself. While it is crucial to inspect every aspect of the unit, it is equally important to evaluate the body corporate responsible for managing the sectional title scheme.

“The body corporate plays a pivotal role in maintaining the complex, enforcing rules, and managing communal finances,” says Cobus Odendaal, CEO of Lew Geffen Sotheby’s International Realty in Johannesburg and Randburg. “Neglecting to assess the body corporate’s management and financial health can lead to unforeseen challenges later.”

Odendaal elaborates on the body corporate’s impact and how it affects property owners:

Shared Responsibilities

In a sectional title property, unit owners hold individual ownership, but the common areas—such as gardens, walkways, parking areas, and pools—are maintained by the body corporate. The entity is also responsible for the upkeep of building exteriors, including painting and structural repairs. Poor maintenance affects not only your quality of life but also the resale value of your property.

Financial Health of the Scheme

A key factor to assess is the financial stability of the body corporate. Poor financial management and insufficient reserves can result in special levies. For example, if the complex roof needs urgent repairs and the reserve fund is inadequate, every unit owner must contribute extra.

A well-managed body corporate with healthy reserves helps prevent these unpleasant surprises.

Impact on Property Value

A mismanaged body corporate can significantly reduce the property value of the entire complex. Prospective buyers are often deterred by high levies, unresolved maintenance issues, or poor management. Over time, a lack of upkeep will further deteriorate the common property, dragging down the value of individual units and making them harder to sell.

Enforcing Conduct Rules

The body corporate is responsible for implementing the complex’s rules, which may govern issues such as pets, noise levels, and communal area usage. A well-run body corporate ensures fair enforcement, maintaining peace and order. In contrast, poor management can result in unresolved disputes and inconsistent rule enforcement, leading to frustration and tension among residents.

Key Factors to Check When Assessing a Body Corporate

Odendaal outlines essential steps for evaluating a body corporate before buying a sectional title property:

1. Financial Statements

Request the latest financial statements of the body corporate to gain insight into the complex’s financial health. Look for:

• A Healthy Reserve Fund: This fund is earmarked for future maintenance and repairs. A well-funded reserve indicates proactive planning and reduces the risk of sudden special levies.
• Debt Levels: High levels of unpaid levies by owners may point to financial instability, meaning you could end up covering shortfalls.

2. Levies

Understand the monthly levies and what they cover, including communal maintenance, security, and insurance. Compare these levies to those of similar complexes. Unusually high levies may indicate poor financial management, while very low levies could suggest that necessary maintenance is being neglected.

3. Minutes of the Annual General Meeting (AGM)

AGM minutes provide valuable insights into the body corporate’s management practices and ongoing issues. Look for signs of unresolved disputes, upcoming projects, or planned special levies. If there is a history of conflict between owners and the body corporate, proceed with caution.

4. Management and Conduct Rules

Review the conduct rules to ensure they align with your lifestyle. These rules can cover pet ownership, noise regulations, and parking guidelines. If you plan to have a pet but the complex prohibits them, it’s better to know beforehand.

5. Maintenance and Upkeep

Inspect the common areas for signs of good or poor maintenance. Well-maintained gardens, clean swimming pools, and functioning communal facilities are positive indicators. Neglected areas suggest a lack of effective management and could lead to future special levies for repairs.

6. Security

Security is only effective if it’s well-managed. Ensure that security measures, such as manned security desks and functional cameras, are in place and properly monitored. Poor security not only risks your safety but can also make the property less appealing to future buyers.

Final Advice

“Remember, when you buy into a sectional title scheme, you’re not just buying a property—you’re also buying into a community that is governed and maintained by a body corporate,” says Odendaal. “Make sure it’s one that operates efficiently and in your best interests.”

By thoroughly assessing the body corporate, you can ensure that your investment is in a well-maintained, financially stable environment, protecting your property’s value and your future peace of mind.

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Buying Sectional Title Property?
Don’t just inspect the unit—check the body corporate’s financial health and management too. Safeguard your investment and peace of mind!

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