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Sectional Title

Sectional Title: what you need to know

The difference between a unit number and a section number
  • Unit numbers and section numbers may be different.
  • In a new development, It can become a problem when a buyer claims that the unit he bought is in fact the other unit where the section number is the same
  • It is therefore a safer option to confirm in writing from the developer or managing agent what the section number has been allocated to which unit.
  • If unsure and it is a re-sale do a deeds office search in the sellers name
  • In the case of a new development, always obtain an identification certificate from the land surveyor of which the surveyor will confirm which section number was allocated to which unit
  • If a wrong section is registered in the name if the buyer a rectification transfer has to be done
  • Make sure your Deed of Sale reflects both the section number and the unit number – because all transfer and bond documents contain only the section number. In some cases buyers are very uneasy to sign the transfer documents if the difference between the unit and section number has not been explained to them
  • Of further importance in the Deed of Sale is the inclusion or not of the exclusive use areas and whether or nit a real right to extend has been registered over the scheme

Why are the square metres n the transfer ad bond documents smaller than the square metres on the contract or site plan

  • In the contract and on the building plan and site plan the unit is measured to the outer edge if the building. All porches ad open stoep areas are normally measured and reflected I these plans.
  • When a surveyor surveys the unit, it is measured to the middle (median) of the outside wall which defines the section
  • A rectangular unit of 150 sqm with a normal cavity outer wall will reflect approximately 7 sqm less on the sectional title plan than on the building plan

Make sure all extensions of the unit have been registered

Obtain copies of registered Surveyor General (SG) plans

Either developer of managing agent, Windeed or Searchworks will have these plans

If surveyed unit differs form the municipal an it will earn that the unit has bee extended and the extended section has nit been registered the deeds office.
This will delay your registration process.

Extending a section
The Sectional Title Act 1986 makes provision in terms f section 24 for the extension of a section when you intend to make structural alterations.

Any alterations that extend the boundaries or floor area if the unit will be seen as an extension.

Legal requirements that must be adhered to are:

Step One:
  • The Act stipulates that you should first obtain the consent form the Body Corporate
  • Usually the Trustees will hold a general meeting and the members must pass a special resolution to agree to the alterations
  • To pass the special resolution you will require consent of 75% of the owners that are present at the meeting.
  • This is time consuming as the members needs 30 days notice in advance of such a meeting
  • Alternatively, to speed the process resolution can be obtained from ALL the individual owners and obtain consent of 75% of all the owners
Step Two
  • Once a Body Corporate consent has been obtained, municipal plans of the extension should be drawn up and approved by the Local Authority
Step Three:
  • A land Surveyor should be appointed to draw new Sectional Title Plans of the Scheme to incorporate the extension. These plans have to be approved by the Surveyor General.
Step Four:
  • Consult with your attorney who will draw the necessary application for the registration of the amended Sectional Title Plan in the Deeds Office and the noting of the change in the extent of the unit
  • If the unit is bonded, the attorney will have to obtain the consent from the mortgagee of the unit
  • With the application in the Deeds Office a transfer duty receipt must be lodged based on the increase in value of the property. It us advisable to obtain two estate agents valuations based on the pre and post alterations value of the property.
  • The Surveyor must stipulate on the Sectional Title Plan that there is not a deviation of more than 10% in the participation quota of the unit as a result of the alterations.
  • If there is a deviation of more than 10% the attorney must obtain the consent of the mortgagees of each and every unit in the Scheme.
  • It is very important that Sectional Title owners adhere to the legalities as an omission could cause extensive delays when the property is sold.

Adding sections to the common land – the importance of the real right to extend

Simultaneously with the opening of the sectional title register the developer depending on the size of his development and financial resources may reserve the right to extend the scheme in terms of section 25 of the Act.
On the Surveyor General plans, a note will be made of the real right to extend, which has been reserved. With this right to extend the scheme the developer:
  • Can build additional units himself on the land OR
  • Can sell a portion or portions of the real right to extend to a purchaser and cedes the right to the purchaser by way of a notarial deed of cession of the portion of the real right
  • Each portion represents a portion of land and is demarcated on a plan drawn by a land surveyor and approved by the Surveyor General.
  • The purchaser will attend to the financing and building of the unit himself.
  • There is usually a time stipulated by the developer in the sale agreement within which the purchaser must build and take steps to incorporate his unit into the Sectional Title Scheme.

If a Real Right to extend the scheme has been registered, this fact will be shown as an endorsement on the deed search.
  • In terms of section 25 any buyer of a unit needs to be informed of the reservation of such real right in the deed of sale or if not, must be consent to abide to the contract if informed about the Real Right after the sale.
  • Conveyancers must ensure that the contract reflects this condition or obtain the consent from the buyers

Understanding Exclusive Use Areas
  • A fair amount of confusion seems to exist regarding the exact nature if exclusive use areas.
  • Exclusive use areas are normally the garden areas, garages, parking bays, carports, patio’s etc. in the sectional title scheme
  • An exclusive use area is defined in the Sectional Title Act as “part or parts of the common property for the exclusive use by the owners of one or more sections”
  • It is clear from the definition that exclusive use areas form part of the common property and it accordingly not owned by any one person or persons.
  • So although from a practical point of view, persons who have exclusive use of an area enjoy rights that are similar to ownership rights in respect of that area, they are not legally the owners thereof

There are two different types of exclusive use areas:
First Type:

  • Exclusive use area is registered in terms of the Sectional Title Act. The developer can delineate areas of the common property as exclusive use areas on the sectional title plan, and these areas can then be registered as such in the Deeds Office when the sectional title register is opened.
  • When the unit is transferred, the exclusive use area is also transferred by way of a Notarial Deed of Cession.
  • The purchaser accordingly receives a document that is registered in the Deeds Office that is proof of the fact that he enjoys the exclusive use if the area
  • This area is depicted on the sectional plan that is registered I the Deeds Office.
  • This type of exclusive use area is the most preferable as it is formal and creates the most certainty. This is known as a REAL RIGHT
  • As an estate agent, we will have to obtain proof of such registration when you do a person search in the deeds office.
  • It will not show under the property search, the area will normally be too small to be a unit and will be described as G (number). P (number) C (number) – this info has to be included in your Deed of Sale.
  • You need to know that no person may be the owner of an exclusive use area if that parson is not the owner of a unit.
  • Therefore ensure that the names on your contract reflect all exclusive use areas being held by the seller if the seller sells his only unit in the scheme.
Second Type:
  • Exclusive use area is one that is created through the Rules of the Body Corporate
  • It is known as a PERSONAL RIGHT
  • If the exclusive use area have not been delineated on a sectional title plan, and there has been no formal allocation of exclusive use areas in respect of the areas (this situation most frequently occurs in the older sectional title schemes) and the body corporate wishes to allocate one specific exclusive use area for each owner for his or her specific use the Body Corporate can follow the following procedure:
  • The sketch plan demarcating each exclusive use area must be drawn up
  • At a meeting of the body corporate this proposal must be passed by a resolution of the members
  • Application should then be made to the Deeds Office to lodge the rules in terms of which the exclusive use areas have been allocated.
  • When you sell a unit and no formal exclusive use areas have been registered, we suggest you obtain confirmation from the managing agent as to whether any personal rights of exclusive use areas have been allocated to the unit in terns of the rules

Explain the costs to the buyer who buy a sectional title unit
  • The normal tariff cost for the registration of the transfer of the unit and the registration of the bond would apply, however, the following additional cost should be added:
  • A LEVY clearance fee would be charged on average R950 – R1200. This is payable to the Managing Agent
  • An Insurance Certificate fee would be charged on the bond on average R950 – R1200. This is payable to the Managing Agent
  • The registration of the exclusive use areas will be charged at R1650 plus VAT per area and a deeds office fee of R280
  • The registration of a sectional title unit with its exclusive use area can therefore easily cost almost R4500 more than the registration of a full title property.