Budget


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Tony

Posted : Wednesday, 27 Jul 2011 21:16 Question

Tony01
Joined : 26 Jul 2011
Posts : 11
Location : Cape Town, Western Cape

How do you go about drawing up a budget. Who is supposed to draw up the budget? The trustees or the managing agent?

Craig Coetzee

Replied : Monday, 01 Aug 2011 08:24 Answer

Craig88
Joined : 25 Jul 2011
Posts : 46
Location : Cape Town, Western Cape

Hi. Budgets are normally done by the managing agent and sent to the trustees to debate. The most important point when looking at increasing your levies; you need to look at the budget. You can't assume to increase your levies by 5% or 10% and think that will be sufficient. You need to understand the financial years upcoming expenses with regards to muncipal increases, maintenance concerns and possible staff increases.if you get your budget wrong, you will be on the back foot for that year. Also, if you understand the budget, you can justify the increase at the AGM. If you have the facts, owners normally understand when the increase is substantial.

Gerhard Bezuidenhout

Posted : Monday, 03 Oct 2011 10:29 Question

Gerhard040
Joined : 03 Oct 2011
Posts : 2
Location : Bloemfontein, Free State

A well established MA in our area has embarked on the modus operandi to call for a "Budget Meeting" in June - the financial year end: it is a trustees' meeting to which all owners were invited. At the meeting the budget for the new year was presented, together with the schedule of replacement values. According to the minutes the trustee meeting had a quorum, two other members were present. I was not there. The outcome was that the levies were raised by 32% (primarily because of expected higher water cost cum municipal malfunction on meter readings) and henceforth the levy statements were sent from July 2011 debiting owners with the recalculated levies. My complaint to the trustees, c/o the MA (requesting a restriction of maximum 10% increase) was met with silence, and after demanding rectification of accounts, was met with the answer (from the MA) that the matter will be discussed at the AGM? In the mean time the AGM notification was circulated, due 17/10/2011 with no budget or schedule of replacement values attached. My question: How to deal with this disgruntling attitude.

Craig Coetzee

Replied : Saturday, 08 Oct 2011 13:00 Comment

Craig88
Joined : 25 Jul 2011
Posts : 46
Location : Cape Town, Western Cape

Hi Gerhard Sorry for the delayed response. The sectional title's act will allow the trustees to increase the levies for the new financial year ONLY by 10%. They are not allowed to back date levies and they cannot increase it by the 32%. Legally you only need to pay the 10% increase. I would suggest that you send a letter to the trustees and the managing agent stating this and if they do not recitify it, you will get legal opinion on this and if it is proven that you are correct, then the body corporate will be held liable for the legal costs. If the trustees were serious about this meeting, they should have called a Special General Meeting to discuss/approve the budget; giving the budget beforehand to the owners to look at and then vote on it. If the owners voted on the budget and approved it (by majority) then the 32% increase could be implemented.

Tertius Maree

Posted : Thursday, 19 Jan 2012 12:39 Comment

Tertius700
Joined : 22 Sep 2011
Posts : 6
Location : Stellenbosch, Western Cape

What is disturbing about Gerhard's post is that the notice of the AGM had been sent out without the budget. Reading his post, and if the trustees' / MA's explanation is accepted, it would seem that the situation was somewhat of an emergency and that the 10% increase probably would not be sufficient to cover the amount due to the muniscipality for water. Assuming that the trustees were unable to make a suitable payment arrangement with the municipality, the answer would obviously have been the imposition of an appropriate speciel levy, rather than to attempt to raise the 'interim' levy by more than the allowed 10% Tertius

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