When a body corporate is established there are a few things that they need to put in place in order to run a successful sectional title scheme. The first thing a newly formed body corporate will have to do is establish a fund to cover all repair and maintenance costs, insurance premiums and management and administration fees. This fund must include reasonable provisions for future maintenance and repairs.

Owners in the sectional title will have to contribute to the fund. Also, owners who have the benefit of exclusive use areas need to make an extra contribution to cover the costs of rates and taxes, maintenance and insurance as well.

The way the body corporate determines the amount that the owner will have to contribute to the fund will be based on the participation quota of the owner’s property or based on a nominated value. The participation quota is based on the size of the unit in square meters, while the nominated value will be a set flat rate that all owners would pay. All funds will need to be put into an account opened and operated by the body corporate its self.

Next the body corporate must have the buildings insured to their full replacement value against fire and other prescribed risks and any other risk determined by the owners by special resolution. Once the building within the scheme are insured the body corporate must issue an owner or registered mortgagee of a section with a copy of the insurance policy and proof of payment of the last premium. A body corporate should also invest in liability cover, in case of incidents where residents are injured on the property.

The body corporate must on a day to day basis make repairs and do scheduled maintenance to the common property and keep it in a good state of repair. They are also responsible for all fixtures and fittings which are used in common property for the benefits of all the owners. The body corporate is also responsible for employing qualified staff to run and maintain the scheme; a managing agent for example to manage the day to day running’s as well as a maintenance manager and if the scheme is security patrolled the management of set staff as well.

The first body corporate is also tasked in appointing trustees and clarifying their duties. All of the body corporates duties and functions are passed to the trustees by the section 39 (1) of the Act, but are always subject to any direction and restrictions that the body corporate may wish to impose. Trustees are elected by the body corporate at its first meeting and at every subsequent Annual General Meeting (AGM). There must be a minimum of two trustees elected, but there is no restriction on the maximum amount of trustees allowed.

The newly elected trustees will then in effect run the sectional title scheme from the first AGM till the next and until new trustees are elected at the following AGM.