Real Estate Investor Magazine South Africa June 2014 | Page 38

STRATEGIES

BY MICHAEL BAUER

Preparing Budgets
Sectional Title: Pay attention to detail

I

t is usually around this time of the year that
sectional title schemes will be holding their
Annual General Meetings.

This is where budgets are discussed, and when the
managing agent or the trustees get to preparing their
budget for the year ahead to present to the members
of the scheme, they must be sure that they have paid
careful attention to all that is needed (and possibly even
future projects that may need to be taken into account).

Prescribed Management Rule 31 (4b) requires levy
increases to be part of the proposed budget and this
must be applied for and approved at the AGM.  
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June 2014 SA Real Estate Investor

 The preparation of the budget is a vitally important
aspect of running a sectional title scheme and is possibly
one of the trustees’ most important jobs to do.  The
figures in this budget must be current and the items on
the list must be adjusted if need be.  If the scheme is a new
one, the trustees should analyse the previous budget set
by the developer and work on their own figures, and not
just stick to what was set previously.  Likewise, amounts
and items on the budget list could change from year to
year, so the trustees should go through these carefully
and not simply rely on the previous year’s budget.
 If the previous year’s finances are analysed carefully,
the trustees will be able to ascertain where there was a
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