Body Corporates - Rezoning a Sectional Title Scheme
We wanted to share an interesting thread from Paddocks Club regarding the rezoning of a Sectional Title Scheme and Jennifer & Graham's advice in this regard.
REZONING A SECTIONAL TITLE SCHEME
Question: We manage a scheme which consists of three separate buildings i.e. four shops with 6 flats above, three back terraced units and three front terrace units (6 terraced units in total).
One owner did renovations prior to getting council approval (don’t know exactly what renovations were done as this was quite some time before our management of the scheme) and is busy selling the unit. Apparently the council will now only approve the plans (which he requires or his sale) if the erf is re-zoned. The owner wanted us to draft a form/resolution for the 6 terrace owners to sign that they are happy to proceed with the rezoning applicating to regularize existing legal non-conforming land use. He would also then like each terrace unit owner to pay approximately R15,000 each for this rezoning.
We noted that this would not be for the approval of the 6 terraced units only but for the entire scheme as we gather that the entire erf is rezoned. We are also not aware of the impact this will have on the shop/restaurant owners.
We feel that the owner should be more transparent as to any effect it would have for ALL owners and that this should be a special general meeting.
Are we correct in our thinking? Many thanks
Jennifers Answer: Your thinking seems to be correct. Rezoning of the entire erf would affect all the units in the scheme, not just the terraced units. Therefore, it would be appropriate for all owners to be informed about the proposed rezoning and its potential impact.
Any changes to permitted land use and zoning rights require the submission of applications by owners. This suggests that the owner proposing the rezoning should provide detailed information about the proposed changes and their potential impact to all other owners.
Furthermore, the decision to proceed with the rezoning application should ideally be made at a special general meeting, where all owners have the opportunity to discuss the proposal and vote on it.
As for the cost of the rezoning, it would be important to clarify who would be responsible for this. If the rezoning is necessary because of renovations done by one owner, it could be argued that this owner should bear the cost. However, this would also be a matter for discussion and decision at the special general meeting.
I hope that helps.
Question: Would this require a special resolution or unanimous resolution. The owner in question, who wishes to get the re-zoning of the erf done thought the consent of all owners is required.
Please advise if there should be a special resolution (i.e. 75% of quorum present) or a unanimous resolution (i.e. 80% agreement).
Graham's Answer: This is not an easy question to answer.
When a sectional title register is opened in respect of a conventional property, the conventional property to which the zoning scheme refers ceases to exist and is replaced by the units (sections and common property) in the sectional title scheme.
My experience has been that local authorities tend not to see the individual units as the entities to which the zoning scheme plan and rules apply, but continue to treat the development as a single property for the purposes of zoning regulations and applications. So, for example if there is a departure for a property in a general residential zone that allows a particular building to be used for commercial purposes, the wording of the departure will refer to the specific building and to the property as if the sectional title register had not been opened.
From a legal perspective, this is clearly wrong, as the departure should attach not to the entire property (which no longer exists) but to the individual unit. But when dealing with such an issue, my view is that one has to accept the limitations of the local authority’s approach to zoning issues in sectional title schemes and work within them as far as possible, BUT without allowing them to prejudice one’s rights.
So, in the situation you describe, where the local municipality is requiring that the entire property (i.e. all the units) be rezoned before it will consider the application to approve one owner’s unauthorised building alterations, all the other owners and the body corporate should consider how a re-zoning will affect them/the common property. For this they will need to see the specific details of the proposed rezoning, and I suggest they should all take independent advice on whether to support or oppose the proposed rezoning application.
All of the text I have set out above serves as an introduction to my answer, which is that this is not a situation in which the question is as simple as whether there should there be a special or a unanimous resolution to authorise the rezoning, because this I don’t think either will suffice.
A body corporate is a creature of statute which, unlike a company, does not have an unlimited capacity to perform legal acts. It can only perform the management acts that the STSMA gives it the power to perform. Sections 4 and 5 of that Act set out the body corporate’s powers, and I cannot find any one of them that seems to cover the power to make application to re-zone all the units or the property as it was before development.
My ‘off the cuff’ conclusion, therefore, is that if the local authority requires the body corporate to make an application to rezone the property, effectively all the units, then the only safe course for the trustees is to require that every single unit owner agrees in writing in terms of a document which sets out in detail the effect of the proposed rezoning on their units, AND in addition, that all bondholders give their written permission.
If this scheme needs more advice in this regard, I suggest that they take all the papers to an attorney with a good working knowledge of both sectional title scheme management and town planning to get a written opinion that they can rely on in this matter.
Graham Paddock is a specialist community schemes attorney, notary and conveyancer. He has been advising clients and teaching students for over 40 years, and was an adjunct professor at UCT for 10 years.
Jennifer Paddock is a dual-qualified lawyer with experience working as a strata title managing agent and solicitor in New South Wales. Prior to this, she served as a specialist sectional title attorney and practice manager at Paddocks for five and a half years. She brings a wealth of knowledge and expertise to the Paddocks team. Contact her at [email protected]
Article reference: Paddocks Press: Volume 18, Issue 24.
This article is published under the Creative Commons Attribution license.