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 ?