Be alert when buy­ing sec­tional ti­tle

Business Day - Home Front - - HOMEFRONT -

CHECK THE FACTS Given the cur­rent eco­nomic cli­mate, buy­ers re­ally need to do their home­work on the fi­nan­cial stand­ing of a com­plex if they are buy­ing into a sec­tional ti­tle or clus­ter scheme. Ger­hard Kotzé, CEO of the ERA SA prop­erty group, warns that the ef­fects of eco­nomic con­di­tions on the prop­erty mar­ket are not limited to full-ti­tle homes and that levy de­faults by res­i­dents in group schemes are be­com­ing an is­sue. The ex­tent of the prob­lem is high­lighted by the news that the col­lec­tion of ar­rear rentals and levies is now reg­u­lated un­der the Coun­cil of Debt Col­lec­tors, in­clud­ing the im­po­si­tion of penal­ties and charges for late pay­ments. “There’s a per­cep­tion that clus­ter and sec­tional ti­tle units are some­how fi­nan­cially safer than stand­alone homes, and while fi­nan­cial risk in terms of mat­ters such as levies and amounts owed by the body cor­po­rate is in­deed spread among own­ers, too many de­fault­ers in a com­plex can be­come a se­ri­ous prob­lem.” It is im­por­tant to ex­am­ine the books of a body cor­po­rate or home own­ers’ as­so­ci­a­tion be­fore you buy, par­tic­u­larly in re­spect of an age anal­y­sis of ac­counts payable and ac­counts re­ceiv­able.

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