Community Schemes Ombud Service Stakeholder Training

4 February 2022 | Zerlinda van der Merwe

I attended the Community Schemes Ombud Service (“the CSOS”) training event held in Cape Town the last week of January 2022, and in my usual fashion, took copious notes, and now wish to share the "highlights" with the community schemes industry. 

I have recently posted the CSOS list of vetted executive managing agents, as well as the CSOS Code of Conduct for executive managing agents, and will be addressing related issues in another blog post in the near future. A point raised at the event, the effect of which could be far reaching, is the CSOS' intention to amend the legislation to "replace" administration of sectional title schemes with the appointment of executive managing agents. 

One of the statements made numerous times during the course of the 2 day event, is that "everything is free of charge" at the CSOS, "except the payment of levies", which we will touch on in this blog post. A colleague in the industry reminded me that it is NOT free as the levy is due and payable by nearly every owner in a community scheme. If you are not aware of this levy, it is time you find out. The "free" services referred to are conciliation, adjudication, filing of annual returns, obtaining copies of rules, having rules reviewed and approved etc. Although not high, these charges were most certainly adding to the delay of the processes at the CSOS. 

On the topic of the payment of levies to the CSOS, please note that if your scheme has never paid a levy to the CSOS, the backdated charge will kick into effect as from January 2017 or the establishment of the scheme. Probably didn't budget for this, did you? And what about the owners that have since sold and moved on? When making levy payments to the CSOS, no longer use "CSOS/" in your reference number. The correct reference is REG/(YEAR OF REG)/(PROVINCE)/(UNIQUE 6 DIGIT REF). Here is an example: REG/22/WP/123456. Send your proof of payment to levypayment@csos.org.za and your queries to levyqueries@csos.org.za. 

The much debated issue of access to owners' contact details in sectional title schemes was raised, and the speaker noted that the CSOS had been in discussions with the Information Regulator, and was of the view that the contact details of owners within a scheme, could only be made available to another owner within the scheme, upon the consent of the owner/s whose contact details are being requested. Our view is different to the one of the CSOS, as the Sectional Titles Schemes Management Act allows access to the contact details of owners, and the question, upon receiving such a request, should be why are the details being sought, and a judgment call made based on this. In other types of community schemes, the governance documentation would dictate the availability of such information.

If you are awaiting the CSOS certificate of approval of your body corporate's amended conduct or management rules, the certificate will be sent to you via email only as of this week. Are you needing to submit your rules for review and approval? If you are a sectional title scheme, you need to submit the Form B, the minutes of the AGM or SGM where the rules were approved (not signed as initially stated as minutes are only approved by the members at the next AGM or SGM), the special or unanimous resolution - or the trustee resolution confirming that such a resolution/s were obtained, and a copy of the amended rules, in their consolidated form, noting that "consolidated" means that any amendment to a set of conduct or management rules must be submitted together in one "consolidated" document. When asked the question, the speaker confirmed that a rule can still be challenged, and found invalid and unenforceable by an Adjudicator despite being reviewed and approved by the CSOS. 

Fines. This is a biggie for those of us that were not clear on the meaning of the CSOS Practice Directive in regard to undesirable rules. A fining rule must include a warning at the outset, which must be in writing, it must explain the breach, request that the contravening party cease non-compliance, set out a deadline to do so, allow for an internal dispute resolution process, such as a meeting with the trustees, and then the enforcement of a monetary penalty. The rule must include the amount/s of the fine/s, which in each instance of a contravention (i.e. per offence), must not exceed or equal the contribution levied on the respective owner. The CSOS confirmed that it would look into the validity of the imposition of summary fines. They also noted that they are in the process of preparing another Practice Directive on further undesirable rules. 

Interestingly, the CSOS staff attend AGM's, just contact Johlene with a motivated request at least 1 week before your meeting, and a CSOS representative will attend, but not chair, your meeting. This may encourage attendance numbers. CSOS are also in the process of compiling an AGM pack as a template.

The process of dispute resolution, namely conciliation and adjudication via the CSOS offices was explained, including the timelines and the steps to follow for urgent matters. This is a topic itself, and will be comprehensively dealt with in the upcoming weeks. We will also deal with an application to the CSOS when a resolution cannot be achieved. Hold onto your hats for this one folks. What I will say in this blog post on the above process, is that the CSOS has confirmed that you should still be choosing an adjudicator and engaging with them before receiving an Adjudication Order. For the last year or so, I have seen and heard that parties are only seeing who the appointed adjudicator is once the Order has been handed down. CSOS have acknowledged their error in this regard in their attempts at speeding up the process. So remember to ask for that list.

CSOS is tightening up on compliance, and have recently issued a media release in regard to registration of schemes, which we shared on social media. The CSOS also circulated, towards the end of December, a draft Practice Directive on compliance and enforcement, which we commented on, and shared these comments on social media.

A compliance and enforcement unit has been set up by the CSOS. Their focus will be dealing with schemes that are not complying with the Community Schemes Ombud Service Act, for example a scheme not registered with the CSOS. This is not to be confused with the dispute resolution process as quickly pointed out by the speaker. To report any such compliance issues, email compliance@csos.org.za. If a scheme is found to be compliant, the CSOS will issue a compliance certificate valid for a period of 3 years.

Click here to watch the recording of the session posted by the CSOS.

If you are a managing agent and/or trustee of a sectional title scheme, please assist us in our 1 question poll, to gather some information regarding unanimous resolutions at AGM/SGMs. Click here to take the poll.

Should you require our assistance with a CSOS matter, please contact us at TVDM Consultants on info@tvdmconsultants.com or 061 536 3138.