Be alert when buying sectional title
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.