Under current prescribed management rules, the trustees need to see to it that the Schedule of Replacement Values (SRV) is presented at the Annual General Meeting for consideration and approval.
Furthermore, the amount of Fidelity cover, if any, needs to be considered by owners at a general meeting.
Strictly speaking, a special resolution should also be taken at a general meeting in respect of the excess rule, i.e. in instances where excesses for damages are to be paid by the body corporate rather than the owner of the damaged section. Lastly, other insurances required, outside the mandate of trustees, should be considered at a general meeting. In a previous blog article, we dealt with this in more detail.
Recently, the proposed new Sectional Title Scheme Management Act regulations were published, together with the proposed management rules for public comment. Interesting that there is a bit more emphasis on insurance management and what needs to be discussed at the Annual General Meeting once these rules come into effect, which is imminent. Effectively, the new proposed PMR 17.(6) will replace rule 56 in setting basic agenda items.
Referring to insurance, as proposed in PMR 17.(6)(j):
(ii) approve the schedules of insurance replacement values referred to in rule 23(3), with or without amendment;
(iii) determine the extent of the insurance cover by the body corporate in terms of rules 23(6), (7) and (8);
Proposed rule 23(3) refers to the presentation of the valuation report which also needs to be presented but as the wording refers specifically to the Schedule of Replacement Values (SRV), we presume that this is an error and should actually state 23(4). In reality, this is as before with the addition of having to present the actual valuation which perhaps should be by way of summary as we recommend.
Proposed PMRs 23(6),(7) and (8) refer to the general meeting deciding on the amounts of liability, fidelity and other cover required respectively (subject to stipulated minimums under proposed Community Scheme Ombud Services Act and Sectional Title Schemes Management Act regulations). In the future, the amount of liability cover, fidelity cover and possible additional cover will be tabled and decided upon as a matter of course at every AGM.
Portfolio managers and insurance brokers or advisors will need to work closely together to ensure that insurance items are prepared and in order ahead of Annual General Meetings.
Author: Mike Addison
Contact Addsure – The Leaders in Sectional Title Insurance – to get fit and proper advice from advisors who understand sectional title. Contact us in Johannesburg on (011) 704-3858; in Durban on (031) 459-1795 and in Cape Town on (021) 551-5069