What Happens if a Body Corporate Is Non-Compliant

Non-compliance with governance requirements under the Sectional Titles Schemes Management Act (STSA) and Community Schemes Ombud Service (CSOS) regulations carries significant consequences for both the scheme and individual trustees. Understanding these consequences is critical for protecting your scheme and your personal liability exposure.

Financial Penalties and Fines

The CSOS has authority to impose financial penalties on schemes that fail to comply with their rulings or governance requirements. These fines can range from R1,000 to R10,000 per violation, and repeated non-compliance can result in escalating penalties. Additionally, schemes may face legal costs if they're forced to defend non-compliance in court.

CSOS Investigations and Rulings

When a resident or stakeholder files a complaint with CSOS, an investigation is initiated. If non-compliance is found, CSOS issues a ruling that the scheme must comply with within a specified timeframe. Failure to comply with a CSOS ruling can result in enforcement action, including court orders and additional penalties.

Personal Liability for Trustees

Non-compliance often exposes individual trustees to personal liability. If a scheme fails to maintain proper financial records, fails to conduct required audits, or fails to disclose conflicts of interest, trustees can be held personally responsible for resulting losses. This liability can extend to legal fees, damages, and injunctions.

Remediation Steps

If your scheme is found to be non-compliant, immediate remediation is essential. This typically involves:

• Identifying specific compliance gaps
• Developing a remediation plan with clear timelines
• Implementing corrective measures
• Documenting compliance efforts
• Communicating remediation progress to CSOS