The trustees of a body corporate must present a Schedule of Replacement Values (SRV) at the AGM for approval. It should reflect the replacement cost of each section and its undivided share in the common property – as stipulated in the Sectional Title Schemes Management Act No. 8 of 2011, rule no. 23.4:
“A body corporate must prepare for each annual general meeting schedules showing estimates of –
- the replacement value of the buildings and all improvements to the common property; and
- the replacement value of each unit, excluding the member’s interest in the land included in the scheme, the total of such values of all units being equal to the value referred to in sub-rule 4(a).”
The role of a good valuer
In carrying out their duty, the trustees will ask the managing agent or insurance advisor to prepare the SRV, who will recommend appointing a professional valuer to compile both the mandatory valuation and SRV. This entails a complex calculation of the participation quota and requires in-depth sectional title knowledge.
There are only a handful of valuation providers who possess the means and expertise to correctly compile the SRV in a format accepted by insurers.
What defines a proper Schedule of Replacement Values?
- Each section's floor area (in square meters) must be listed individually.
- The replacement cost per square meter should be indicated separately for each type of section (i.e. residential, commercial, garage, store room, etc.).
- The participation quota (PQ) per section must be indicated.
- The sum insured per section must be shown.
- Exclusive use areas must be reported separately.
- The cost of demolition, rubble removal and professional services and VAT must be included.
- The SRV must indicate the insured’s name and policy number.
In order to arrive at a common denominator for the rate per square meter, the sections must be valued in accordance with the latest approved sectional title plans.
It is the individual owners’ responsibility to adjust their unit’s sum insured as and when their sections undergo alterations. The additional insurance premium is for the account of the owners, NOT the body corporate.
On special request and for a small fee, the valuer will assist individual owners to determine the replacement value of their unit upgrades and include these in the valuation report.
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