Sectional Title Schemes… What now?
As a first-time buyer deciphering the complexed jargon of the property market can be a tedious task. This article intends to assist you in this “deciphering process” and provide you with a basic understanding of the aspects that you, as a prospective and/or current sectional title owner, should know about sectional title schemes.
So, what is a sectional title?
At its most basic level sectional title allows for the individual ownership of a unit within a larger complex or development. This is as opposed to freehold ownership, where an owner purchases the entirety of the land and buildings situated on a particular piece of property.
The Body Corporate
Upon registration of transfer of a unit in a sectional title scheme the new owner will automatically, by operation of the law, become a member of the body corporate and as such will be bound by the rules of such body corporate. It is for this reason that we strongly recommend that before submitting an offer to purchase a unit in a sectional scheme a prospective purchaser requests a copy of the rules of such body corporate.
Trustees of a scheme
These are individuals who are elected by the owners (members) of the body corporate to run the scheme. Essentially, they are equivalent to a board of directors of a company. At the Annual General Meeting (AGM) of all the owners, Trustees are elected to administer the day-to-day management of the scheme. Trustees’ powers may be limited by restrictions imposed on them by other members at a general meeting. However, if no restrictions are placed on trustees, they may exercise all the functions and powers of the body corporate.
Managing Agent
A managing agent is an individual or company that has the knowledge and experience to manage the scheme. The members of the scheme may require the trustees to appoint a managing agent to help them fulfil their obligations under the Sectional Titles Act 95 of 1986, the Sectional Title Schemes Management Act 8 of 2011 and its Regulations, as well as the Prescribed Rules. As a member to the body corporate one becomes quite familiar with the Sectional Title Schemes Management Act. It mandates the creation of a body corporate to oversee and control sections and common property in sectional title schemes, as well as the application of scheme-specific regulations.
In addition to owning your own unit or section as a sectional title owner, you also become a “part owner” of the common property of the other buildings or complexes. There are three types of properties that compromise a sectional scheme. We shall take a deeper look into what those three types of properties.
Three Types of Properties in a Sectional Scheme
1. Owners’ Section
The units that are individually owned within the scheme and registered in the name of the owner are known as owners’ sections. The extent of your ‘section’ or unit is determined from the sectional plans filed in the Deeds Office.
2. Exclusive Use Area
Parking bays, gardens, storerooms, and balconies are examples of exclusive use areas, which are portions of the common property for which an owner will pay a levy in exchange for the exclusive right to use that area. This area can then only be used by the owner, with no other owners in the body corporate.
3. Common Property
Common property is owned by all of the owners in the scheme in undivided shares based on the owner’s participation quota and is for the use and benefit of all members of a scheme Examples of common property are; pools, communal gardens or the main driveway. The rights of use of common property areas can be limited in terms of the rules of the scheme, therefore it is important that one familiarises themselves with the body corporates rules.
This article is only a brief overview of a very complicated legal area. If you have any additional questions about managing agents or body corporations, we recommend that you speak with a sectional title lawyer with the necessary experience. Kindly keep a lookout on our website for a follow up article to Sectional Title Schemes and levy collections.
Article Thasmika Appadoo