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The Community Schemes Ombud Service (CSOS) Act came into force in 2016 in order to regulate the operations of all community schemes in South Africa.
What is a Community Scheme?
Community schemes are housing schemes where the common use and responsibility for the land and buildings within the scheme is shared.
The Purpose of The Community Schemes Ombud Service Act
There are three fundamental purposes of the CSOS Act:
- To provide dispute resolution strategies in respect of community schemes
- To promote and manage ethical governance of community schemes
- To provide documentation, education and information services to raise awareness for persons who have rights and obligations community schemes
There is often conflict when there is shared responsibility for land and building and, the CSOS aims to manage operations and provide efficient and cost-effective methods for dispute resolution within community schemes.
Examples of Community Schemes
Typical examples of community schemes include:
- Share block companies
- Sectional title development schemes
- Development schemes for retired persons
- Home owner’s associations
CSOS Registration
The Act requires all new community schemes to register with the CSOS within 30 days of the date on which they were incorporated.
CSOS Levies
The CSOS is funded by the levies collected from community schemes. The Act stipulates that certain levies are to be paid by the schemes to the CSOS on a quarterly basis.
The schemes collect prescribed monthly levies from each unit within the community on a monthly basis.
The CSOS levies are calculated according to the levies charged by the schemes. Below is a table that outlines how the levies are determined:
CSOS Levy Calculation Community Scheme Levy Per Unit CSOS Levy Per Unit R0 - R500 R0 R500 - R600 R2 R600 - R700 R4 R700 - R800 R6 R800 - R900 R8 R900 - R1000 R10 R1000 - R1250 R15 R1250 - R1500 R20 R1500 - R1750 R25 R1750 - R2000 R30 R2000 - R2250 R35 R2250 - R2500 and above R40
Therefore, depending on the community scheme levy amount, the prescribed minimum CSOS levy is R0 and the maximum is R40 per unit, per month.
CSOS levies are collected by the schemes and must be paid at the end of March, June, September and December every year.
It’s important to distinguish between a scheme’s monthly levies and special levies as special levies collected by the scheme do not form part of the CSOS levy calculation.
CSOS Levy Exclusions
The regulations provide for the following exclusions when it comes to CSOS levies:
- Individual units within a community scheme for which the monthly levy is less than R500.00 are granted 100% waiver
- Any unit whose monthly net household income is less than R5 500.00 is entitled to 100% waiver and adjudication fees in respect of any dispute before the CSOS
- Any individual who does not automatically qualify in terms of the above criteria may apply for a discount or waiver. The Chief Ombud will consider the application
CSOS Compliance – Penalties
When schemes do not comply with the Act’s provisions, they will be faced with significant penalties. Schemes will be charged an interest rate of 2% per month for non-payment of levies.
According to section 34 of the Act, persons who fail to comply with the Act will face conviction and may be liable to a fine or imprisonment for a period of up to 5 years, or both.
When an individual is convicted for a second time for the same offense, he or she will be liable to a fine or imprisonment for a period of up to 10 years, or both.
Schemes will make use of normal debt collection methods to collect outstanding levies from unit owners.
How to Recover Outstanding Levies - The Legal Process in South Africa
Van Deventer & Van Deventer Incorporated – Attorneys South Africa
Community schemes are responsible for managing and administering the scheme and it’s owners in a professional manner.
This includes timeous collection of levies and payment thereof to the CSOS. If you would like more information about the CSOS and community schemes in South Africa, please feel free to contact our attorneys in Cape Town and Johannesburg.