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Can a body corporate institute action against the sectional title developer?

“In our sectional title scheme, it has become clear that many of the structures on the common property have been poorly built and are defective. However, the body corporate is uncertain whether it can take action against the developer for these defects and accordingly nothing is happening. Surely the body corporate should be able to do something?”

The Sectional Title Scheme Management Act 8 of 2011 (STSMA), bestows on the body corporate certain rights and responsibilities of which the most common one is to administrate an account for the repair, maintenance, management and administration of the common property.

The STSMA also establishes that a body corporate is a legal entity that can sue or be sued in its own name in respect of the following:

  1. Any contract entered into by the body corporate.
  2. Any damage to the common property.
  3. Any matter in connection with the land or building for which the body corporate is liable.
  4. Any matter arising out of the exercise of any powers or performance or non-performance of its duties
  5. Any claim against the developer in respect of the scheme if so determined by special resolution.

As the common property is owned jointly by all sectional owners of the scheme in undivided shares, the above empower a body corporate to sue in its own name to recover damages arising from damages caused to any part of the common property including taking action against the developer.

The question that follows from this is whether a special resolution is required (point 5) in order for a body corporate to take action for damage to the common property (point 2). This aspect was recently considered by our courts where it was held that if action is instituted by a body corporate against a developer under point 2, no special resolutions are required to proceed with action against the developer. Point 5 therefore does not limit the rights of the body corporate under point 2 but rather provide the body corporate with an extra power to sue developers where the claim is one “in respect of the scheme” for example, to compel performance of an obligation resting on the developer under the scheme, such as handing over all contracts concluded before the body corporate was established or payment of levies for units still registered in its name etc.

From the above it is clear that a body corporate can institute action against a developer for damages to the common property and also does not need to obtain a special resolution in order to do so. We would recommend that the body corporate solicit the help of an attorney to assist in taking the necessary steps against the developer.

November 10, 2020
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