Amidst the national energy crisis and the recent tax incentive implemented for solar installations, the need for owners to install solar within their units has become palpable.
However, the unanswered burning question remains: How?
Unlike a free-standing house, an owner does not have the luxury to take a unilateral decision to install solar without seeking consultation or approval from various key players.
At a community scheme expo hosted by the National Association of Managing Agents (NAMA) on 18 and 19 May 2023 at Gallagher Estate, one of the discussions was entitled ‘Solar – Additions, Alterations, National Building Regulations, Insurance, Grid Interruption Exclusions’, which expectedly generated a great deal of debate.
Based on the aforesaid discussion, a few noteworthy articles which have been published on the topic and the prescriptive laws and regulations governing sectional title; it appears that there are two ways in which schemes can approach solar installations:
- Creation of exclusive use areas
- Improvement to common property which is reasonably necessary
It must be emphasised that both of these approaches have their advantages and disadvantages, and that neither of these approaches can be declared categorically correct or incorrect.
Creation of exclusive use areas
In essence, this approach entails making the roofs on which the solar installation is placed exclusive use areas in the conduct rules of the scheme.
Exclusive use areas are the areas in a scheme whereby an owner/s have the exclusive use over an area/s which is common property, i.e., is owned by all owners within the scheme.
The rationale behind making the roofs exclusive use areas is that the roof, being the area on which the solar installation is placed, is for the exclusive use of the owner who has installed the solar.
In order to execute this approach, the exclusive use area would have to be created through the conduct rules and all rules which are applicable to this process would have to be adhered to.
For example, a layout plan to scale illustrating the locality of the exclusive use areas, being that of the roofs, as well as the purpose for which it is being used would have to be annexed to the conduct rules. An additional monthly cost contribution, which is a discretionary nominal value, would also attach to the creation of the exclusive use areas to pay for the costs attributable to that area such as maintenance and insurance. The additional cost contribution is often regarded as a disadvantage to this approach, which is an additional cost for owners, in addition to the layout plan to scale, which can be an onerous task for the body corporate.
Adopting this route would allow the body corporate to decide as to whether the maintenance and insurance costs are for the account of the owner or the body corporate.
An alternative is to make all costs associated with the roofs (including maintenance and insurance) for the account of the body corporate, and of the solar panels for the account of the owner. The reason for this is that it is the solar panels, which the owner is deriving exclusive use and benefit from, and the roofs are used and benefited by all owners.
On the subject of damages, which may be a point of contention, the correct approach to adopt would be to say that any damage to the solar panels or to the roofs and other areas which emanate from the solar panels is for the owners’ account. Any damage, which source is identified as the actual roof, would be for the account of the body corporate. Once again, the reason for this is that the solar panels on the roofs are the specific area from which the owners are deriving exclusive use and benefit.
Reasonably necessary improvement to common property
This approach is based on the notion that the installation of solar panels on the common property, which is assumed to be the roofs, is deemed to be a reasonably necessary improvement in terms of Prescribed Management Rule 29(2), which requires the passing of a special resolution.
In terms of this rule, a special resolution will be deemed to have passed and the body corporate can carry out the improvement provided that written notice is given to all members of the scheme and that no members object to the aforesaid notice in writing within 30 days of the aforesaid notice. The notice must set out:
(1) the estimated costs associated with the proposed improvement
(2) details of how the body corporate intends to meet the costs (including details of any special contributions or loans required by the body corporate for the installation), and
(3) a motivation for the proposal including drawings of the proposed improvements showing their effect and a motivation of the need for them.
If any member objects in writing to any aspect of the aforesaid notice, a general meeting must be convened to discuss the aforesaid notice, and the proposal contained in the aforesaid notice can only be implemented (with or without amendment/s), once it is approved, by way of a special resolution. The special resolution passed must include any and all conditions as agreed during the meeting and will be passed, provided that the quorum for the meeting is established and a 75% vote in both number and value obtained.
Other aspects to be included in the notice should include the service provider effecting the installation (more specifically their accreditation to install solar and the number of years for which they have been installing solar), drawings of the proposed installation, how often the service provider attends to the maintenance of the solar panels, how the installation will impact the body corporate insurance, whether or not the owner will be liable for the insurance costs of the panels and who is liable for any damage which the solar may cause to any area within the scheme. This will enable the members to have all relevant information and documentation at their disposal to make an informed decision as to whether or not they agree with the proposal contained in the notice.
Moreover, the body corporate has a statutory obligation to maintain the common property and ensure that it is kept in a state of good and serviceable repair. Solar installations present several aesthetic, safety and related risks, such as fires caused by solar panels, which need to be addressed.
In many instances, the body corporate decides not to engage in the project of solar installation within the scheme. This does not prohibit the body corporate from allowing individual owners to install solar by using this approach. The provisions of Prescribed Management Rule 29(2), which have been set out above, would apply, except that the owner/s wanting to install solar would have the responsibility to prepare all the information and documentation which must form part of the notice distributed to all members.
Individuals may understandably have their reservations about this approach, as it could lead to multiple meetings (in the event that there are written objections to the proposal/s submitted) which is administratively burdensome. However, the common property is at stake, which must be sufficiently safeguarded by its owners.
Whichever approach is elected should be concretised by way of an amendment to the conduct rules of the scheme, which amendment shall be in terms of section 10 of the Sectional Title Schemes Management (STSM) Act, No. 8 of 2011 and require the passing of a special resolution of members.
If the special resolution is passed, it must be submitted to the Community Schemes Ombud Service (the CSOS) together with the proposed amendment, a register from the meeting at which the vote was taken and the minutes of the meeting, in addition to a completed form B – Notification of Amendment of Rules, which notice can be accessed from the CSOS website. The amendment will only take effect once the CSOS has issued a compliance certificate in respect of it.
The conduct rule should specify which approach has been elected by the body corporate and also deal with aspects, such as whether the body corporate or owner is liable for the maintenance and insurance of the solar panels and associated damages. In essence, the conduct rule should specify all reasonable and necessary conditions in respect of solar installations within the scheme to safeguard the scheme and its members.
If one chooses to adopt the exclusive use area approach, the solar installation would only be able to commence once the CSOS has issued a compliance certificate for the amendment. If one chooses to adopt the reasonably necessary improvement to common property approach, and there are no written objections by any members within 30 days of the notice, the installation can be implemented upon expiration of the 30-day notice period and the special resolution will be deemed to have passed. If there are any objections within the 30-day notice period by members, a general meeting is convened and a special resolution passed, the installation can be implemented subject to the special resolution and any conditions imposed therein.
This is a novel and grey area within sectional title at the moment which requires a great deal of refinement, debate and directionality. There is no right or wrong approach per se but it can be undoubtedly concluded that solar installations cannot go ahead without the requisite approval and that bodies corporate should exercise caution in ensuring that the approach adopted for solar installations is best fit for the layout and nature of the scheme in question, and that a solar expert who specialises in bodies corporate is consulted to assist in deciding on the most viable approach for the scheme.