Click here for the first sectional title Q&A

Question:
I am in the process of purchasing a sectional title flat. What do I need to know? Do you have any advice for me? What should I look out for?

Answer:

Know what you're buying

When you buy into a sectional title scheme you are buying a composite thing called a 'unit'. A unit consists of a section together with a share in the common property. A section is an area which you own exclusively (such as a townhouse or apartment) to the median (middle) line of the walls, floors and ceilings. The common property is an area which you will co-own with all other section owners and includes all areas of the scheme which are not included in the sections such as driveways, entrance foyers, stairs, lifts, gardens, swimming pools and so on. You may also benefit from exclusive use rights allocated to your section. Exclusive use rights may be allocated in terms of the scheme's rules or they may be indicated on the scheme's sectional plan. Exclusive use areas are common property and therefore they are owned by all owners of sections in undivided shares, but they are reserved for the exclusive use of a specific owner or a specific group of owners.

Participation in management of scheme

Buying a unit in a sectional title scheme comes with automatic membership to the governing body of the scheme, called the 'body corporate'. Membership is mandatory so even if you are a buy-to-let owner you, as owner, are the member of the body corporate and not your tenant. The body corporate is an association of owners which exists to run the scheme from a financial and administrative point of view and maintain the common property. Owners elect a board of trustees to carry out the body corporate obligations at every Annual General Meeting (AGM) and in many schemes the trustees contract with a managing agent to assist them in this regard.

What costs will you be responsible for?

All costs related to your section are for your own account. Remember that you only own your section to the median line of its floors, walls and ceilings and therefore the foundations, 'outer-skin' and roof of the building are common property and are therefore not your exclusive financial responsibility. All costs related to the common property as well as all payments for the general running of the scheme are paid by the body corporate from its levy fund. Levies are calculated after the members of the body corporate approve a budget at each annual general meeting. The necessary funds are then recovered from the owners based on their participation quotas (a calculation that in residential schemes is based on the floor area of your section divided by the total floor area of all the sections in the scheme) unless a special rule has been made that provides otherwise and the owners are then charged accordingly.

The trustees are also entitled to raise special levies over and above the ordinary levies for necessary expenses which were not budgeted for at the last annual general meeting. Provided special levies are properly raised owners are obliged to pay them.

Other expenses for your account are rates, water and electricity (these are sometimes included in your levies depending on whether the scheme has implemented separate water and electricity meters or not), maintenance of geysers serving your section (whether or not they are situated on common property) and contributions towards maintenance of your exclusive use areas.

How do the rules of the scheme restrict the use of your unit?

All schemes are governed by the Sectional Titles Act 95 of 1986 and a set of management and conduct rules. These rules are binding on owners and occupiers and transgressions of the rules may have negative implications for you. It is important to obtain a copy of the scheme's rules before buying into a scheme to ascertain whether there are any rules that you are not happy to be bound by (e.g. if no pets or leases for less than six months are allowed).

Is the scheme subject to future development rights?

If the developer or the body corporate has future development rights to extend the scheme, these rights must be disclosed in every deed of sale for units in that scheme. If you sign a deed of sale and find out afterwards that the developer or body corporate hold future development rights which were not disclosed in your deed of sale, you are entitled to walk away from the contract.

Are you buying off-plan?

It is not unusual to buy a unit in a sectional title scheme before the scheme has been registered or even before the building has been built. If you are buying 'off-plan', as sales of this nature are often described, the latest date of completion must be stipulated in the deed of sale. You should not pay any money directly to the developer until the certificate of completion has been issued. Money may be held in trust, either by an attorney or an estate agent, on the developer’s behalf until the certificate of completion is issued, but the developer is not entitled to receive any consideration until then.

Documents to inspect and things to look out for:

1. Scheme's rules — make sure there are no restrictions that you can’t live with.

2. Sectional plan — make sure that what you are buying in terms of your deed of sale is shown as such on the sectional plan.

3. Body corporate's latest financial statements — check that the body corporate is not in any debt and look for favourable reserve funds.

On page two and three: What can you do if some owners have levies that are outstanding? How are lawyers' letters dealt with and who is responsible for their cost?

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