When buying into a residential estate there are a number of legal requirements a community scheme must have in place, one of which is the adherence to paying Community Scheme Ombud Service fees
WORDS: Alan Levy Attorneys: community scheme attorneys in Johannesburg :: PHOTOS: ENVATO ELEMENTS
A community scheme refers to a scheme or arrangement where there is shared use of, and responsibility for, parts of land and buildings. This includes a sectional title scheme, a homeowners association, a housing scheme for retirees, a housing co-operative and a share block scheme. If you are an owner in a community scheme, you may have wondered what your monthly CSOS levy contribution is and what it is used for.
WHAT IS THE CSOS?
The Community Scheme Ombud Service, or the CSOS, is a public entity created by the Community Schemes Ombud Service Act No. 9 of 2011. The CSOS came into operation on October 7 2016 and falls under the portfolio of the human settlements minister
WHAT IS THE ROLE OF THE CSOS?
Disputes over a variety of issues may arise between people who have a material interest in the scheme, such as the scheme itself, represented by the scheme executives, an owner or an occupant. These parties may be in disagreement over how finances should be utilised, which behaviours are acceptable, or how the scheme should be managed or overseen, and by whom.
Fortunately, conflicts and disputes no longer need to be addressed through arbitration or the courts. Dispute resolution is the primary role of the CSOS. However, the role of the CSOS is not limited to dispute and conflict resolution.
As per Section 4 of the CSOS Act, the CSOS fulfils several functions and subfunctions, as follows:
- Regulating, monitoring and controlling the quality of all sectional title governance documentation;
- Taking custody of, preserving and providing public access electronically or by other means to sectional title scheme governance documentation;
- Promoting good governance of community schemes; and
- Providing education, information, documentation and other services to raise the awareness of owners, occupiers, executive committees and other people.
WHAT IS THE CSOS LEVY?
The levy is collected by a community scheme from the owners in the scheme and paid to the CSOS under Section 29(1)(b) of the Community Schemes Ombud Service Act No. 9 of 2011, which came into effect on October 7 2016. The amount that each owner in a community scheme has to pay, and its manner of calculation, is
set out in the regulations to the CSOS Act published by the human settlements minister on October 7 2016.
Each scheme is obligated to collect the CSOS levy from every owner in the community scheme and to pay such an amount over to the CSOS on a quarterly basis.The monthly levy payable by the owner depends on the monthly levy charged by the community scheme to that particular owner, as set out by the Regulations.
The actual formula for the monthly levy is as follows: the lesser of R40.or 2% of the amount exceeding R500 of the levy. Therefore no levy
is payable to the CSOS if the levy charged is less than R500. The maximum monthly amount payable by a unit to CSOS is R40 per month.
WHEN ARE CSOS LEVIES DUE?
Owners in a community scheme are billed on a monthly basis for the CSOS levy. The levy for all the owners is then paid by the community scheme to CSOS on a quarterly basis. Community schemes must use their CSOS registration number as a payment reference for all payments made to CSOS.
The Community Scheme must pay CSOS quarterly in terms of CSOS Regulation 11(1) and in terms of the Practise Directive of the Chief Ombud dated June 14 2018:
- Quarter 1, ending March 31 (payment by April 7);
- Quarter 2, ending June 30 (payment by July 7);
- Quarter 3, ending September 30 (payment by October 7);
- Quarter 4, ending December 31 (payment by January 7).
As per the CSOS Practise Directive No. 3 of 2017, certain unit owners automatically qualify for exemption from the CSOS levy payment:
- Unit owners residing in schemes for retired persons who are in mid-care/assisted living;
- Unit owners residing in schemes for retired persons who are in frail care;
- Unit owners who receive Sassa grants;
- Unit owners with a net monthly income below R5,500.
WHAT ARE THE CONSEQUENCES OF NONPAYMENT OF CSOS LEVIES?
There are several repercussions for the nonpayment of a CSOS levy. As per Section 34(1)(b) of the CSOS Act, nonpayment of CSOS levies is a criminal offence. There are also financial penalties. Interest is charged at 2% per month for CSOS levy payments not made within the due date.
