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.   36 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 www.reimag.co.za