Property Law and Sectional Title

 

 

 

Yes, sectional title rules can be changed or amended, as long as the changes align with the Sectional Titles Act.  The process for doing so is clearly defined in the Act and rules.

How are rules changed? 
Proposed rule changes are presented to the body corporate members at a general meeting. This allows for discussion and debate before a vote is taken.

What voting is required?

  • Management Rules - Amendments require a Unanimous Resolution.
  • Conduct Rules - Amendments require a Special Resolution.

When do changes take effect? 
Amendments only become effective after being filed at the Deeds Office.

Many sectional title schemes in South Africa do have security measures, but it's not a universal requirement.  The level of security varies widely and depends on the specific scheme's rules, budget, and location.  Common security features include access control (gates, booms), security guards, electric fences, CCTV surveillance, and alarm systems.  However, some smaller or older schemes may have minimal or no formal security.

Guest parking in sectional titles isn't mandatory.  Some schemes (often newer/larger) have visitor parking, especially where parking is scarce. Older/denser schemes may have little or none.  If guest parking exists, rules apply (time limits, permits) and are enforced by the body corporate.  Without guest parking, visitors park on the street, or residents must make arrangements. Always check a scheme's specific rules regarding guest parking.

Managing a sectional title scheme is complex and time-consuming.  Most schemes appoint a managing agent—a specialized company—to handle these tasks.

Managing agents handle finances (collecting levies, bookkeeping, debt recovery, budgeting), arrange maintenance (getting quotes), communicate with owners (sending statements and notices), and assist trustees.

Managing agents have expert knowledge of sectional title law, saving the body corporate time, money, and potential problems.  They must be registered with the Estate Agency Affairs Board and have a Fidelity Fund Certificate if handling body corporate funds.

Internal disputes in South African sectional title schemes should first be addressed through internal dispute resolution mechanisms, such as mediation or arbitration as outlined in the scheme's rules or the Sectional Titles Act.

If these fail, the Community Schemes Ombud Service (CSOS) offers a cost-effective alternative to litigation. Litigation should be a last resort. 

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Sectional Title Property

Sectional title ownership offers a unique way to own property in South Africa, combining the independence of owning your own unit with shared responsibility for the common areas. Whether you're considering a modern apartment, a family-friendly townhouse, or a secure estate, understanding the intricacies of sectional title is crucial. This page provides a comprehensive overview of sectional title property, from the basics of ownership to the legal framework that governs these properties, empowering you to make informed decisions about your property investment.

What is Sectional Title Property?

Sectional title ownership in South Africa refers to owning a specific unit (or section) within a larger complex or development, such as a townhouse, apartment, or duet house. This ownership includes not only the individual unit itself, but also a proportional share of the common property, which is shared by all unit owners within the complex. Essentially, you own your designated space and a share of the overall property.

What are the Benefits of Sectional Title Property?

Sectional title ownership offers a range of advantages, making it an attractive option for first-time buyers, investors, and those seeking a convenient and secure lifestyle.  Often more affordable than freestanding houses, sectional title units provide an entry point into the property market while minimizing maintenance burdens.  For investors, these properties offer strong rental potential and contribute to portfolio growth. Buying off-plan can further enhance affordability, providing a brand-new unit with modern amenities and the assurance of a well-planned development.

Key Benefits of Sectional Title Living:

  • Easier Financing: Developments are often pre-approved by banks, streamlining the bond application process.
  • Managed Living: A body corporate handles the maintenance and upkeep of common areas, security, building insurance, and other essential services, all funded by a monthly levy. This eliminates the hassle and expense of individual maintenance.
  • Enhanced Security: Sectional title properties typically offer superior security features, including controlled access and perimeter security, providing peace of mind for residents.
  • Predictable Running Costs: While owners are responsible for their unit's rates, taxes, and internal upkeep, many external maintenance costs are covered by the levy, making budgeting more predictable.
  • Rental and Resale Potential: The popularity of sectional title properties with renters makes them ideal for investors. This demand also contributes to strong resale value over time.
  • Connectivity and Convenience: Many sectional title developments offer fiber connectivity, a significant advantage for those working from home. The "live, work, play" lifestyle is also becoming increasingly common, with amenities and workspaces often located within the complex.
  • Community and Lifestyle: Sectional title living fosters a sense of community, with shared facilities like pools, braai areas, and gardens. These communal spaces, combined with enhanced security, make these properties particularly appealing to families. The low-maintenance lifestyle and convenient amenities also make sectional titles ideal for those seeking a balanced work-from-home environment.

What are the Potential Drawbacks of Sectional Title Ownership?

Before purchasing a sectional title unit, it's crucial to thoroughly research the body corporate's financial health, rules, and track record.  Understanding the potential drawbacks and being prepared for them can help you make an informed decision.

  • Levies -  Owners are required to pay monthly levies to cover the running costs of the complex, such as maintenance, insurance, security, and management fees. These levies can increase over time and are a fixed cost, regardless of whether you use the common property or not.  Special levies can also be raised for unexpected major repairs or upgrades, which can be a significant financial burden.
  • Limited Control - You don't have complete control over your property.  You're bound by the rules of the body corporate, which can dictate things like pet ownership, parking, renovations, and even the appearance of your unit's exterior.  You may not agree with all the rules, but you're still obligated to follow them.
  • Body Corporate Management -  The effectiveness and efficiency of the body corporate directly impact your living experience.  A poorly managed body corporate can lead to neglected maintenance, financial mismanagement, and disputes with other owners.  Dealing with difficult or unresponsive body corporate members can also be frustrating.
  • Disputes with Neighbours -  Living in close proximity to others can sometimes lead to disputes with neighbours regarding noise, parking, common property use, or adherence to the rules.  Resolving these disputes can be time-consuming and stressful.
  • Dependence on Others:  The maintenance and upkeep of the common property are dependent on the body corporate and other owners.  If other owners are unwilling or unable to contribute their share, it can negatively impact the entire complex.
  • Restrictions on Use -  There might be restrictions on how you can use your unit, such as limitations on running a business from your home or short-term letting.  These restrictions are usually outlined in the body corporate rules.
  • Selling Challenges -  Selling a sectional title unit can sometimes be more challenging than selling a freehold property.  Potential buyers may be deterred by high levies, poorly managed complexes, or disputes within the body corporate.
  • Financial Risks -  If the body corporate is financially unstable, it can impact the value of your unit.  For example, if the complex doesn't have sufficient funds for necessary repairs, it can lead to deterioration and a decrease in property values.  Owners can also be held liable for the debts of the body corporate in certain circumstances.
  • Lack of Privacy -  Living in close proximity to neighbours can mean less privacy than owning a freehold property.  Shared walls, common areas, and the proximity of other units can reduce your sense of privacy.

Sectional Title Insurance: A Guide for Owners

Understanding your sectional title insurance is crucial.  It protects you financially and prevents surprises.  Here's a simplified overview:

Body Corporate Insurance: What's Covered

Sectional title schemes must have insurance.  It covers the building structure and fixtures (immovable property) of all sections and common property, like fire, floods, and burst pipes. The cost is included in your monthly levies.  You can request increased coverage for your section (especially after renovations), but you'll pay the extra premium.

What's Not Covered

Body corporate insurance does not cover movable contents like furniture, décor, and personal belongings.  You need your own home contents insurance for these.

Your Responsibilities

  • Review the Policy - Get a copy of the body corporate's insurance policy and understand it. Ask the trustees or managing agent if you have questions.
  • Replacement Value -  You can review the schedule of replacement values, which details the insured value of the buildings.
  • Claims Process - Know the claims procedure in case of an incident (flood, burst pipe, etc.). Many insurers have 24-hour helplines.
  • Excess - The owner making the claim usually pays the insurance excess.

What to Consider Before Buying a Sectional Title Property

Before purchasing a sectional title property, it’s essential to do your due diligence to ensure that the property meets your needs and that the scheme is well-managed.

1. Review the Financials - Ask for a copy of the body corporate’s financial statements to assess the financial health of the scheme. Look for indicators such as adequate reserve funds, timely payment of levies by owners, and a history of sound financial management. 

  • Debt Levels - High levels of outstanding levies or debt may indicate potential financial problems that could lead to special levies or increased contributions.

2. Understand the Rules - Request a copy of the scheme’s rules and regulations to ensure that you can comply with them. Pay attention to rules regarding pets, renovations, and the use of common property.

  • Pet Ownership - If you have pets or plan to get them, check whether the scheme allows pets and under what conditions.

3. Inspect the Common Property - Inspect the condition of the common property and amenities. Well-maintained common areas indicate that the body corporate is managing the scheme effectively.

  • Maintenance Standards -  Look for signs of neglect, such as overgrown gardens, damaged fencing or poorly maintained pools, which could signal potential issues.

4. Speak to Current Residents - If possible, speak to current residents to get their perspective on living in the complex. They can provide valuable insights into the management of the scheme, the behavior of neighbours and any potential issues.

Sectional title properties offer a unique blend of affordability, security, and community living, making them an attractive option for many South African homebuyers. However, understanding the complexities of sectional title ownership is crucial to making an informed decision. By considering the benefits, challenges, and key factors before buying, you can ensure that your investment in a sectional title property is a sound one.

How we can assist with Sectional Title Property Ownership?

  • Legal Advice and Due Diligence - We can provide comprehensive legal advice to potential buyers or sellers of sectional title properties. Our team can conduct due diligence on behalf of clients, reviewing property documents, title deeds and relevant agreements to ensure that all legal requirements are met and potential risks are identified.
  •  Drafting and Reviewing Contracts - We can draft and review contracts related to the purchase, sale or lease of sectional title properties. These contracts include offers to purchase, sale agreements, lease agreements and management contracts. By ensuring that these contracts are legally sound and protect our clients' interests, we aim to help prevent future disputes and minimize risks for Sectional Title Property Owners.
  •  Governance and Compliance - Sectional title schemes require the establishment of a body corporate or homeowners' association to manage the communal aspects of the property. Our dedicated team can assist in setting up these entities, ensuring compliance with applicable regulations, and drafting the necessary governing documents, such as the constitution and rules. They also provide guidance on the roles and responsibilities of the body corporate or homeowners' association and help resolve governance-related disputes.
  •  Dispute Resolution - Our team specializing in sectional titles can provide effective dispute resolution services, including assistance in resolving disputes between parties such as home owners, the managing agents and external parties. These disputes may include financial disagreements, maintenance issues, noise complaints, or breaches of rules and regulations.

The legal framework governing sectional titles in South Africa undergoes periodicnand updates. Aucamp Attorneys are constantly keeping on top of these changes, which are crucial for property owners and sectional title management bodies to understand. Due to our expertise in specializing in property law, we are well-equipped to remain abreast of legislative developments and ensure that our clients are fully informed and compliant with the latest regulations. We can provide guidance on how legislative changes impact sectional title properties and help clients adapt their practices accordingly. Contact us for a consultation.