LEGISLATION
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CsoSA
The
Community Schemes Ombud Service Act – A summary
Objectives
To take custody of your governing documents To monitor governance and compliance To train directors, homeowners and staff To provide dispute resolution
•
To appoint and train adjudicators To impose a levy
Levy
•
The lesser of R 40 or 2 % of the amount by which the monthly levy charged by the
• scheme exceeds R 500. Units with monthly scheme levies of R 500 per unit or less are entitled to a 100 %
• waiver. All units will be entitled to a waiver of the
• levy on the first R 500. For units with a scheme levy of R 2 500 per unit or more, the CSOS monthly levy is
• capped at R 40. The higher the monthly levy, the higher the
• levy contribution to CSOS, with a cap of R 40. Levies are paid quarterly.
Compulsory insurance
“ Insurable person” means any( a) scheme executive;( b) employee or agent of a community scheme who has control over the money of a community scheme;( c) managing agent; or( d) contractor, employee or other person acting on behalf of or under the direction of a managing agent, who in the normal course of the community scheme’ s affairs has access to or control over the monies of the community scheme.
The minimum amount of the fidelity insurance cover required is the total value of the community scheme’ s investments and reserves at the end of its last financial year; and 25 % of the community scheme’ s operational budget for its current financial year.
Outstanding issues that communities need clarity on
1. The issue of fiscal power to collect a levy – There is no evidence provided by the Department of Human Settlements or the CSOS as to where the CSOS Act finds its fiscal powers to impose a levy.
2. The issue of a cross-subsidised levy – All over the world an ombudsman is a free service to assist parties to have a dispute heard. The CSOS is charging schemes that have a monthly levy of R 500 or more and not charging schemes with a lower levy.
3. The issue of what constitutes a levy – Schemes operate differently and apply a range of different budget line items that are included in their operational budget. There is no clarity on what is deemed to be included in a levy.
4. The issue of VAT – There are schemes that are not VAT-exempt. The question of whether the levy is VAT-inclusive or VAT-exclusive has not been answered.
5. The issue of capital expenditure and reserves – There are schemes that allocate part of the monthly levy to a reserve fund and schemes that raise a levy for capital expenses. There is no clarity on whether the definition takes this into account or not.
6. The issue of levy defaulters – All levies of schemes are based on an operational budget. If we have members who do not pay their levies, or do not pay over the CSOS levy, it is impossible to pay the levy to the CSOS. Alternatively the scheme becomes a banking facility for the state.
7. The issue of non-payment by a scheme – What legal standing does the CSOS have on a scheme that does not pay the CSOS levy over?