Legal Talk – Understanding Sectional Title

WHAT IS A SECTIONAL TITLE UNIT?

A Sectional Title Unit consists of a section of a building/s or various buildings on a piece of land demarcated on a sectional plan drawn by a land surveyor, together with an undivided share in the common property. All the sections together with common property comprise “the Scheme” hereinafter referred to as “the complex”.

WHAT IS THE COMMON PROPERTY?

This comprises the areas which are utilised by all owners, e.g. the grounds, driveways, roads, recreation facilities, corridors, entrance areas and exterior of the building i.e. whatever does not constitute a section.

WHAT ARE EXCLUSIVE USE AREAS?

In certain instances parts of the common property e.g. parking bay or garden area, etc may be delineated as an exclusive use area and the right to the exclusive use of such area is conferred on an owner of a section. Exclusive use rights can be acquired and held in terms of the rules applicable to the Complex or by way of Notarial Cession of exclusive use rights. In many instances areas which appear to be exclusive use may in fact be rented from the Body Corporate in which case they do not enjoy the status of “exclusive use rights”.

IS OWNERSHIP ACQUIRED OF THE PROPERTY PURCHASED UNDER SECTIONAL TITLE?

Yes. Ownership rights are registered in the Deeds Office and a Title Deed (or Notarial Cession in the instance of certain exclusive use areas) is issued upon registration of the Sectional Title Unit as proof of ownership.

WHAT IS THE DIFFERENCE BETWEEN A SHARE BLOCK SCHEME AND SECTIONAL TITLE SCHEME?

A share block scheme involves the selling of shares in a share block Company which owns a building and the sale of the share entitles the owner to occupy a portion of the building. These shares cannot be mortgaged and the transfer of the right to occupy is effected by a share transfer as opposed to registration in the Deeds Office.

WHAT IS A REGISTERED REAL RIGHT OF EXTENSION?

This is a right of extension reserved by the developer of the scheme to extend the scheme within a certain period by the addition of certain units and/or buildings for his own account. The plans of the proposed extension must be drawn and approved at the time that the scheme is registered. If the right of extension is not exercised or reserved, the right to extend the scheme vests in the Body Corporate. Any prospective purchaser must be made aware of the existence of a reserved right of extension in the Deed of Alienation failing which he/she is entitled to resile from the contract.

WHO CONTROLS THE COMPLEX?

The Body Corporate is responsible for the control, administration and management of the Complex.

WHAT IS THE BODY CORPORATE?

All the owners of sections in the Complex constitute the Body Corporate. At an Annual General Meeting of all the owners, Trustees are elected to carry out the day to day running of the Complex. In many instances and especially with bigger Complexes, the Trustees utilize the services of a Managing Agent to assist them. Ultimately the control lies with owners in a general meeting.

WHAT ARE LEVIES?

The levy comprises all the anticipated costs of the running of the Complex and usually includes:

• rates and taxes payable to local authority by the Complex if the units are not separately ratable;
• water;
• electricity and repair costs relating to the electrical installation in the common area;
• insurance replacement costs of buildings in the Complex;
• managing agent fee;
• annual audit fee;
• security and maintenance costs.

One of the main functions of the Trustees is to set a monthly levy for each Unit.

HOW IS THE AMOUNT OF THE LEVY DETERMINED?

The Trustees will calculate the total annual budget required for the running and maintenance of the Complex. The budget will be made up from inter alia the items mentioned above. The annual total is reduced to a monthly budget which in turn must be collectively paid by the individual owners. The levy payable by any one owner is calculated as a percentage of the floor area of that owner’s section to the total floor area of all the sections in the Complex, otherwise known as the participation quota.

WHAT ARE “SPECIAL LEVIES”?

In the event that insufficient funds are available for maintenance and/or improvements, a special levy may be raised by the Body Corporate at a general meeting. Owners of sections will thereupon be liable to make a further contribution which may be payable in instalments. The questions of liability for and disclosure of an existing or possible special levy should be dealt with in the deed of sale.

WHAT ARE MANAGEMENT RULES?

The Sectional Titles Act contains provisions regarding the management of the Complex, e.g. how Trustees are elected, what the obligations of the Trustees are, what the voting procedure is at general meetings, etc. It is possible for the Body Corporate, by unanimous resolution to amend, substitute, add to or repeal the Management Rules from time to time. These are available for inspection at the Deeds Office.

WHAT ARE CONDUCT RULES?

Each Complex has a set of conduct rules to regulate the conduct of owners in the Complex to ensure acceptable behavior by all the owners, e.g. rules regarding keeping of pets, refuse removable, etc. It is possible for the Body Corporate, by special (75% majority) resolution to amend, substitute, add to or repeal the conduct or rules from time to time.

WHAT ARE THE DUTIES OF AN OWNER?

An owner shall:

• permit any person authorised in writing by the Body Corporate, at all reasonable hours on notice (except in the case of emergency, when no notice shall be required), to enter his/her section or exclusive use area for the purposes of inspecting it and maintaining, repairing or renewing pipes, wires, cables and ducts existing in the section and capable of being used in connection with the enjoyment of any other section or common property or for the purposes of ensuring that the provisions of the Act and the rules are being observed;
• carry out all work that may be ordered by any competent public or local authority in respect of his/her section, other than such work as may be for the benefit of the building generally, and pay all charges, expenses and assessments that may be payable in respect of his/her section;
• repair and maintain his/her section in a state of good repair and, in respect of an exclusive use area, keep it in a clean and neat condition;
• use and enjoy the common property in such a manner as shall not unreasonably interfere with the use and enjoyment thereof by other owners or other persons lawfully on the premises;
• not use his section or exclusive area, or permit it to be used, in such manner or for such purpose as shall cause a nuisance to any occupier of a section;
• notify the Body Corporate forthwith of any change of ownership in his/her section and any mortgage or other dealing in connection with his/her section;
• ensure that the section is used for what it was intended, e.g. residential or business;
• to acquaint himself/herself with the content of the management and conduct rules and abide therewith.

CAN A UNIT BE EXTENDED, CONSOLIDATED OR SUBDIVIDED?

Yes, but only after:

• the approval of the Body Corporate;
• the approval of the Local Authority;
• a sectional plan of subdivision / extension has been drawn by a land surveyor and approved by the Surveyor General;
• an application to the Deeds Office to register the extension or subdivision has been made.

Courtesy: STBB Smith Tabata Buchanan Boyes

STBB Smith Tabata Buchanan Boyes is a firm of business-minded lawyers which was established in 1900. At present, the firm consists of over 100 professionals practising from 15 offices throughout South Africa.

Visit their website: www.stbb.co.za or contact them on: +27 (0) 31 583 8060

Disclaimer: The material contained in this article is provided for general information purposes only and does not constitute legal or other professional advice. We accept no responsibility for any loss or damage which may arise from reliance on information contained in this article. © Copyright STBB Smith Tabata Buchanan Boyes 2007. All Rights reserved