Most sectional title schemes hold less than 10% of their required reserve fund. Banks, trustees and buyers carry this risk without knowing it. SchemeGuard makes it visible.
South Africa's STSMA requires every body corporate to maintain a fully-funded 10-year Maintenance, Repair and Replacement Plan. Almost none do.
Most schemes have no credible MRRP as required by PMR 22 of the STSMA Regulations. Where plans exist, they are typically backwards-engineered to justify the current (inadequate) reserve balance.
Our pilot analysis of 9 KwaZulu-Natal schemes shows average reserve fund adequacy of just 6.3% of the required target. Not a single scheme meets the standard.
Lenders hold bonds over units in schemes carrying R100B+ in unfunded maintenance liabilities — risk that appears nowhere in credit assessments or transfer documentation.
Trustees who fail to maintain the MRRP and fund the reserve adequately face personal liability, removal from office, and potential CSOS enforcement orders — most are unaware.
PMR 22 of the STSMA Regulations is unambiguous. Every scheme must have a written, AGM-approved 10-year plan covering six statutory elements.
Creates and registers sectional title schemes
Mandates reserve fund establishment and maintenance
Requires detailed 10-year MRRP with 6 statutory elements
Reserve fund ring-fenced exclusively for MRRP implementation
SchemeGuard produces a composite risk score combining MRRP compliance and financial health into a single, actionable rating for every scheme.
Our KwaZulu-Natal pilot analysis reveals a consistent pattern: schemes are financially managed with reasonable competence, but universally failing on long-term capital planning.
| Scheme | Overall | Rating |
|---|---|---|
| Scheme A | 2.21 | High Risk |
| Scheme B | 2.29 | High Risk |
| Scheme C | 2.58 | Moderate |
| Scheme D | 2.74 | Moderate |
| Scheme E | 2.85 | Moderate |
| Scheme F | 2.86 | Moderate |
| Scheme G | 2.99 | Moderate |
Latest year submissions, sectional title schemes only
The typical scheme holds just 6.3% of its MRRP-required reserve fund. The statutory minimum contribution floor is already being breached by most.
Schemes are collecting levies, managing expenses and maintaining liquidity — the MRRP underfunding is the singular dominant drag on overall scores.
Bordeaux and The Beacon both moved from Moderate to High Risk between 2024 and 2025 — an early warning signal the data makes visible.
In schemes with large insured values, the unfunded MRRP liability per scheme can exceed R100M — and trustees are personally exposed for non-compliance.
Every participant in the sectional title value chain carries reserve fund risk. SchemeGuard makes it measurable for all of them.
Unpriced reserve fund risk sits in every sectional title mortgage book. No systematic assessment tool currently exists at origination or portfolio level.
Trustees are unaware of their obligations and managing agents carry reputational and liability risk when schemes they manage are non-compliant.
Buyers acquire undisclosed contingent liabilities at transfer. A pre-purchase reserve fund assessment is a genuine consumer protection product.
Most trustees serve without any training on their statutory obligations. Personal liability exposure is real, immediate and largely unknown.
From a single trustee briefing to a bank-wide portfolio screen — SchemeGuard has a service for every level of engagement.
Single scheme compliance assessment covering MRRP status, reserve fund adequacy, composite risk score and trustee liability summary.
Buyer due diligence report on reserve fund position and unfunded liability exposure prior to unit transfer. Delivered within 48 hours.
Bank or managing agent portfolio screening using AFS data. Risk-rated output with adequacy ratios and composite scores across all schemes.
Full PMR 22 compliance report, trustee briefing document and 10-year MRRP framework template. Protects trustees from personal liability claims.
Year-on-year tracking of scheme financial health and MRRP funding progress. Delivered with each set of annual financial statements.
Expert analysis and report preparation for CSOS disputes or litigation involving reserve fund non-compliance and trustee liability.
Submit three scheme AFS sets for a complimentary pilot assessment — no obligation. See your schemes scored, rated and benchmarked against our dataset.
Submit 3 scheme AFS sets for complimentary risk assessment reports.
Banks and managing agents: 30-minute portfolio screening demonstration.
Free awareness session on PMR 22 obligations and personal liability exposure.