The STA requires a body corporate to take out an insurance policy that covers the buildings to their full replacement (not market) value. This policy, which will cover the risks commonly associated with a residential property, applies to the entire property, not just the common areas. Before the AGM, you should be sent a schedule setting out the replacement values of each section.
In too many cases, the trustees simply increase the level of insurance in line with inflation each year. Over time, this can result in the property being under- or over-insured.
How do you know if your sections are adequately insured? If the scheme consists of more than about 10 units, the property should be valued by a professional valuer every two to three years. A professional valuer has access to up-to-date data about the cost of building materials and labour in each province, and will be able to provide the trustees with a comprehensive report on what it would cost to rebuild the property. There’s no reason why this report should be withheld from body corporate members.
When assessing a property, the valuer will probably inspect the interior of only a few of the sections. An owner who has carried out extensive remodelling may think that his or her section is under-insured relative to most of the other sections. In this case, the owner can insure his or her section for a higher value, but will have to pay a higher premium. Insurance premiums are included in the monthly levy.
Unless the body corporate has amended the relevant management rule, owners are liable for the excess on claims for damage to their sections.
The body corporate’s insurance policy will not cover household contents.
10. Will the scheme suit your lifestyle?
Remember that creating, amending or deleting a conduct rule requires the consent of two-thirds of the owners, so you can be sure that the rules express the norms and standards that the overwhelming majority of owners want to prevail.
They say there are “only” three sources of conflict in sectional title schemes: pets, parking and people.
* Pets. A body corporate’s policy on keeping pets – dogs, in particular – will be set out in its conduct rules. It is not unusual for the body corporate to make keeping a dog conditional on obtaining the trustees’ written permission and to place restrictions on the types of dog that can be brought onto the property. When granting permission to keep an animal, the trustees may set certain conditions with regard to cleanliness and control.
If you see animals on the property, don’t assume that the scheme is pet-friendly. A body corporate may have created a “no dogs” rule, but the rule could include a “grandfather clause” to enable residents who owned dogs before the rule was registered to keep them until their animals die.
* Parking. It is unlikely that a sectional title scheme will have sufficient parking bays to accommodate the vehicles of every resident. Trustees are under no obligation to find or create parking if there is a shortage. You buy into a scheme “as it is”, and the onus rests on you to ascertain whether there will be sufficient parking for your household’s vehicles.
It is incorrectly assumed that if a scheme has visitors’ parking, these “spare” bays can be allocated to residents. Providing visitors’ parking is a town planning requirement, and each municipality has a formula that determines the number of bays a scheme must set aside for visitors’ cars. It would be unlawful for the trustees to allocate these bays to residents, although it is not unusual for trustees to allow residents to park there during “off-peak” times if the bays are not occupied by visitors’ vehicles. If you don’t have enough permanent parking, find out if such a concession is available and if it will suit you.
* People. All sectional title schemes are governed by the same laws and regulations, but the character and living environment of each scheme depends on the type of people who live there.
It is a generalisation, but, unfortunately, one not without an element of truth, that tenants, particularly short-term renters, are less likely to play by the rules than owners who intend to remain in a scheme for a long time. The higher the ratio of resident-owners to tenants, the greater the probability that the scheme will be well run and conflict kept to a minimum. Owner-residents have a financial and personal stake in the scheme – after all, it’s their home – whereas buy-to-let owners’ only concern may be that their rental is paid on time.
The profile of the residents in a scheme is often determined by where it is located and its facilities. A building near a university campus is likely to attract students; an upmarket scheme out in the suburbs will probably have an older age profile. If a scheme has a swimming pool or recreational facilities, you will probably be the odd one out if you insist on peace and quiet on Saturday and Sunday afternoons.
Source – https://www.iol.co.za/personal-finance/sectional-title-all-the-ins-and-outs-1858044