What sectional title buyers need to know
HERE are a lot of good reasons to consider a sectional title property: the perceived safety in numbers, having somebody else to deal with maintenance and repairs in the complex, a communal lifestyle and the generally lower price compared with full-title homes.
Many first-time buyers will find themselves looking into sectional title units as a way to get onto the property ownership ladder without necessarily understanding the rights and obligations involved. Here are some hints and tips on typical sectional title issues.
Martin Bester, MD of Intersect Sectional Title Services, said prospective buyers should be aware of the rules, regula- tions and governance pertaining to sectional title schemes and units to get the best out of living in one and getting a good return on their investment.
He said the first thing to do was to establish the exact nature of the ownership arrangement. “Buyers often confuse property governed by a homeowners ’ association with that falling under a sectional title body corporate, which is governed by the Sectional Titles Act. In fact, there are differences: in a homeowners’ association setup, each unit is built on its own separately owned erf and the owner is responsible for everything entailed in a full-title property setup — rates, taxes, insurance, municipal services and maintenance. Each owner contributes to the establishment of rules that govern the complex and pays a levy towards upkeep of common property.
“A sectional title setup, how- ever, involves joint ownership of the buildings and land, with a unit and perhaps some parts of the common property designated for your exclusive use. The owners collectively form a body corporate, which is responsible for maintenance and upkeep [of the common property and external parts of the buildings], as well as establishing the rules of the scheme. These management and conduct rules have to be registered at the deeds office, and elected trustees are tasked with overseeing compliance in the scheme, as well as taking care of maintenance.
“It is essential to obtain and study a copy of the body corporate rules and regulations before buying into a sectional title scheme. These rules govern the owners within the confines of the scheme and lay out what is acceptable general conduct in and around the complex, as well as specific issues such as pet ownership.”
In other words, unlike with a homeowners ’ association, once the rules are laid down and formally registered, you’re unlikely to be able to change them on your own. If you disagree with, or cannot abide by, the complex rules and these cannot, or will not, be amended, it’s usually better to find another scheme that suits your needs. “Once a body corporate has been established, owners can only change the management rules by means of a unanimous decision and the conduct rules by means of a special resolution.”
Another important issue to consider is the sectional title scheme’s financial position. “Buyers can request to see the financial statements of the body corporate to assess the liquidity of the scheme.”
If you buy into a scheme with a high level of debt or poor cash flow, chances are that maintenance and upkeep will be compromised and your home — as well as your investment — could suffer.
If you live in a communal setup, what falls under your control and what doesn’t? For one thing, Bester said, a body corporate ’ s insurance policy would not cover movables such as furniture and curtains. The elected body corporate trustees have a duty to insure buildings and improvements from the beginning, and to renew that cover (for buildings, common property and fixtures) every year, but the onus for insurance for movable items falls on individual residents.
In a sectional title setup, any extensions of a unit need to receive approval from the body corporate in the form of a special resolution. “The owner must arrange a draft sectional plan of extension, which is then submitted to the surveyor general for approval. A land surveyor or architect must also confirm that the proposed extension does not exceed the current 10% extension threshold.”