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Legal Authority for Installation
The Sectional Titles Schemes Management Act (STSMA) and its accompanying regulations provide the primary legal framework for sectional title schemes. Specifically, Regulation 29(4) of the STSMA Regulations stipulates that the installation of prepaid meters requires a special resolution of the members of the body corporate.
This means:
- At least 75% of the members present or represented at a general meeting, both in number and in participation quota, must vote in favour of the installation.
- A 60-day written notice must be given before the meeting, detailing the proposed installation and its impact over the next three years.
For Homeowners Associations, the governing documents (such as the constitution or memorandum of incorporation) must be consulted. In most cases, a special resolution or amendment to the rules may be required, depending on the nature of the scheme and its governance structure.
Constitutional and Statutory Considerations
While prepaid meters offer a practical solution to utility management, they must be implemented in a manner that respects the constitutional rights of residents.
The right to access basic services, such as water and electricity, is protected under Sections 25, 26, and 27 of the Constitution. Accordingly:
- Disconnection of services due to non-payment is not permitted unless authorised by a court order.
- The Community Schemes Ombud Service (CSOS) has issued circulars stating that rules allowing disconnection of utilities for non-payment are undesirable and non-compliant.
Prepaid meters circumvent this issue by placing the responsibility on the resident to load credit. If no credit is loaded, the service is automatically suspended, not by the body corporate, but by the meter itself. This distinction is crucial in avoiding unlawful “acts of spoliation.”
Practical Challenges and Considerations
Despite their benefits, prepaid meters present several challenges:
- Installation Costs: Retrofitting older buildings may require extensive rewiring and plumbing, significantly increasing costs.
- Tenant Agreements: Landlords must obtain tenant consent before altering the method of utility billing, particularly if the lease specifies inclusive utility charges.
- Scheme-Wide Implementation: Partial implementation is often impractical. Most suppliers recommend full scheme conversion to ensure uniformity and operational efficiency.
Benefits of Prepaid Metering
When properly implemented, prepaid meters offer several advantages:
- Financial Control: Occupiers pay upfront, reducing the risk of arrears.
- Fairness: Each unit is billed based on actual consumption, preventing cross-subsidisation.
- Administrative Efficiency: Bodies corporate avoid the burden of chasing utility payments and can focus on core governance functions.
Dispute Resolution and Enforcement
Should disputes arise, the Community Schemes Ombud Service Act (CSOSA) provides a structured mechanism for resolution. Adjudicators may issue orders for:
- Confirmation of debts,
- Rent diversion (where tenants pay rent directly to the body corporate),
- Enforcement of scheme rules.
Conclusion
Prepaid meters can be a valuable tool for community schemes, but their implementation must be legally compliant and sensitive to the rights of residents. Trustees and managing agents are advised to seek legal counsel before proceeding with installations, ensuring that resolutions are properly passed, notices are issued, and all stakeholders are adequately informed.
For more information and legal advice, contact Van Deventer & Van Deventer Incorporated, Trusted Attorneys. We offer expert guidance on scheme governance, dispute resolution, and regulatory compliance.