Prepaid Meters in Complexes: What You Need to Know

Switching to prepaid electricity meters in a community scheme (like a Sectional Title complex or a Homeowners Association/HOA) can be a great idea. It helps the scheme manage its money better and stops people from running up huge bills. However, there are strict legal rules you must follow to make the switch. It's not as simple as just installing the meters.

The Legal "Must-Do's" for Installation

The biggest rule is that you can't just decide to install prepaid meters—you need the owners' formal approval.

For Sectional Title Schemes (Body Corporates):

1. Special Resolution is Key: The Sectional Title Management Act  (STSMA) says you must get a Special Resolution of the members of the body corporate. This is a high bar, meaning:
2. • At least 75% of the owners who attend the meeting (or are represented by proxy) must approve it. This 75% applies to both the number of people and their participation quota (their unit's size).
2. Give Owners Plenty of Notice: You must send out a written notice about the meeting 60 days in advance. This notice must clearly explain the plan, including what the installation will cost and what impact it will have over the next three years.

For Homeowners Associations (HOAs):

• You must check your specific governing documents (like your constitution or memorandum of incorporation). They will specify the voting percentage or process you need to follow to make this kind of major change.

The Constitutional "Don'ts": Don't Cut Off Electricity!

Even with a prepaid meter, you must remember that access to basic services like electricity is a right protected by the South African Constitution.

• You Can't Disconnect Services: The Body Corporate or HOA cannot legally disconnect an owner’s water or electricity because they owe money (have arrears). To do this, you would need a court order.
• CSOS Says No: The Community Schemes Ombud Service (CSOS), which handles disputes in schemes, has clearly said that any scheme rule that allows trustees to cut off utilities for non-payment is illegal.

How Prepaid Meters "Work Around" the Law

This is where prepaid meters are clever. If a resident hasn't bought any electricity, their power turns off. This is a suspension of supply by the meter itself, not a disconnection by the Body Corporate. This difference is important because it prevents the scheme from unlawfully taking the law into its own hands (a process called spoliation).

Common Challenges and Practical Rules

Installing the meters is often a big project with practical hurdles:

• High Costs: Older buildings may need extensive rewiring, new meter boxes, or other major changes. The trustees must carefully weigh these installation costs against the long-term benefits of not chasing bills.
• Tenants and Leases: If a unit is rented out and the lease includes electricity, the landlord cannot force the tenant to switch to prepaid. The lease agreement must be formally changed, and the tenant must agree to the new system. It's best to get legal advice before changing lease terms.
• Go All-In: It’s best to install prepaid meters for all units at the same time. Installing them only for some units can lead to confusion, unfair billing, and conflict among residents.

The Upsides: Why Prepaid Meters are Worth It

When done correctly, prepaid meters are a great solution:

• Better Finances and Fewer Debts: The scheme no longer risks owners building up huge unpaid electricity bills. Residents pay upfront, which immediately reduces the scheme's financial risk.
• Fairer Billing: Everyone pays for exactly what they use, eliminating arguments about high shared bills or estimated usage. This creates a better sense of fairness and accountability.
• Less Admin for Trustees: The scheme management no longer must calculate, invoice, and chase up electricity payments, freeing up trustees and managing agents to focus on maintenance and governance.

What If There’s a Dispute?

If an owner or resident disagrees with how the meters were installed or how they work, they can take the issue to CSOS.

• CSOS Can Resolve Disputes: The Ombud can investigate the complaint and issue a binding order—without the need for expensive court action.
• Focus on Process: CSOS will check if the scheme followed the rules: Did you pass the Special Resolution correctly? Did you give proper notice? They will not support the Body Corporate if they try to use the meters as a punitive measure or try to disconnect power.

The Final Takeaway

Prepaid meters are a smart tool, but they are not a shortcut to get rid of problem tenants or owners.

To succeed, your scheme MUST:

1. Get the required Special Resolution from owners (75% support).
2. Respect constitutional rights (no illegal disconnections).
3. Educate owners and tenants and get their cooperation.

If you are planning to make the switch, it is highly recommended to get professional legal advice to ensure you follow every rule and avoid costly disputes down the line.