The rise in popularity of sectional title ownership over the last three and a half decades is a testament to the fact that sectional title ownership is fast becoming the preferred home ownership option for both resident owners and buy-to-let investors. Yet this complex form of ownership is still widely misunderstood. Many people put pen to paper without fully or even vaguely understanding the concepts relating to sectional title.

Here is a list of the basics to help get you started…

Unit

When buying into a sectional title scheme, you buy a composite thing called a 'unit' which consists of a section plus an undivided share in the common property.

Section

A section is what people often refer to as a 'flat'/'townhouse'/'apartment' and is exclusively owned by the owner to the mid-point of its floors, walls and ceilings.

Common Property

The common property is the rest of the land and buildings not contained in sections, such as garden areas, driveways, foyers, lifts, staircases, passages and so on. Every owner of a section also owns an undivided share in the common property which means that theoretically every owner may use every part of the common property and that no owner may appropriate a portion of the common property for his sole use.

Exclusive Use Areas

In practice parts of the common property, such as parking bays and balconies, may be set aside for the exclusive use of a particular owner/s and these parts are referred to as 'exclusive use areas'. This does not mean that the holders of exclusive use rights own these areas; they simply have the right to use them to the exclusion of the other owners. Exclusive use areas remain part of the common property and are therefore owned by all owners of sections in undivided shares.

Participation Quota

The participation quota is a fraction or percentage used to determine such things as the size of an owner’s share in the common property, the value of an owner’s vote, an owner’s financial contribution towards the running of the scheme (his levy) and the portion of an owner’s share of the debts of the body corporate. In a wholly residential scheme an owner’s participation quota is always calculated by dividing the floor area of his section by the total floor area of all the sections in the scheme.

Body Corporate

The body corporate is the management body that exists to administer the land and buildings that make up the scheme. Unit owners are automatically members of the body corporate from the moment transfer takes places and they continue to be members until they cease to own a unit in the scheme.

Trustees

These are persons elected by the body corporate (by owners at the annual general meeting) to carry out its functions and duties. The trustees make day-to-day decisions on behalf of the body corporate but it is important to note that the trustees are not 'in charge' of the scheme. They are the servants of the body corporate; owners hold the ultimate decision-making power and can give the trustees binding instructions.

Managing agent

In most medium-sized and large schemes the trustees appoint a professional manager to help them carry out the functions and duties of the body corporate. This person is referred to as a managing agent and is required to possess a valid Fidelity Fund Certificate if s/he in anyway manages a scheme’s levy income.

Management and Conduct Rules

The Sectional Titles Act 95 of 1986 ('the Act') is the legislation that governs sectional title schemes in South Africa. The Act prescribes two sets of rules, the Management and Conduct Rules, which control the administration of schemes and the behavior of owners and occupiers. A developer of a scheme may choose to adopt these rules in their prescribed form, or to adapt the rules to suit the particular needs of the scheme. The body corporate can also amend their provisions at a later stage. These rules, in their prescribed or adapted form, are binding on both owners and occupiers of sectional title schemes.

Ordinary Levies

The trustees estimate the body corporate’s expected expenditure for each forthcoming financial year, take this budget to the Annual General Meeting for approval by owners and, once approved, they divide the estimated expenditure between the owners (generally in accordance with each owner’s participation quota) to work out each owner’s ordinary levy. After notice each owner is liable to pay levy contributions, generally in monthly instalments.

Special Levies

If a necessary expense arises during the course of the year for which the body corporate did not budget, the trustees are entitled to raise a 'special levy'. The trustees can decide whether the special levy is to be paid in one lump sum or in instalments.

www.paddocks.co.za

Click here to ask specialist sectional title lawyer Jennifer Paddock any question regarding sectional title property.

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