Introduction to Sectional Title

Sectional Title means the ownership of property, collectively and individually, combined. It is regulated by the Act on Sectional Titles, Act 95 of 1986.

Why Sectional Title ?

The following are reasons for buying Sectional Title:

What have you bought ?

The section that you have bought consists of the unit, any exclusive use areas like a garage, garden, etc., and an undivided share of the common property. Your share of the common property (as also the worth of your vote in some instances, and your levy) is calculated according to the floor area of your unit in relation to the combined floor area of all the units. This is called the participation quota.

The unit

You are fully in control and responsible for the inside of your unit. Some damages (not maintenance) that may occur on the inside is, however, covered by the collective insurance policy. This includes water damage to ceilings, carpets, etc., and also burst geysers. The excess payment on the claim will, however, be for your own account.

Exclusive use areas

These are areas which have been allocated to you for your exclusive use. They may be registered or unregistered and may even be registered at a later date. However, they remain under the control of the Body Corporate who will make rules, and enforce them, on how you make use of them.

To erect structures or effect alterations or improvements, you will need the approval of the Trustees, which are the representatives of the Body Corporate.

Common property

The common property consists of all the areas in the complex, which are for the use of all residents, including the exclusive use areas. It includes driveways, communal gardens, guest parking, pool, communal barbeque areas, etc. They are also managed in accordance with rules made by the Body Corporate.

Rules

Generally the rules registered for the complex, are the rules according to the Sectional Titles Act. These can, however, be extended, etc. and then be reregistered. The conduct rules of the Sectional Titles Act should, however, be sufficient to regulate most matters. The rules are equally applicable to all residents, including tenants, visitors and guests. Residents are responsible for the conduct of their children and guests. All legal costs incurred in the enforcement of rules, etc. are for the account of the resident concerned.

The Body Corporate

Every owner forms part of the Body Corporate, which is the final authority on all matters. At the Annual General Meeting, the Body Corporate decides on matters such as levies, insurance, the representatives of the Body Corporate called the Trustees, the appointment of the auditors, managing agent, etc.

Each unit has one vote at the Annual General Meeting,. The owner may appoint a Proxy in the prescribed manner.

The Trustees

The Trustees, who may not be less than two, are appointed at the Annual General Meeting. They do not have to be owners, although the majority must be. They serve without reimbursement and very often have a most thankless job. It is important to elect the right people to these important positions.

The Trustees must manage the affairs of the complex in accordance with the Act on Sectional Titles and they mostly appoint a Managing Agent to do the administration and advise them with regard to the various delicate and complicated matters, which arise from the management.

The Managing Agent

The Managing agent collects the levies, does the bookkeeping, prepares budgets, arranges General Meetings, sends out notices, and advises the Trustees on various matters.

Levies

A house owner has a lot of expenses for which he is responsible, all by himself. A lot of these expenses, in the case of Sectional Title, are shared by all the owners in the complex. A budget in which provision must be made for a year’s municipal fees (rates & taxes, water, sewerage and refuse removal), insurance on the buildings, wages, maintenance on buildings, gardens and security, audit fees, managing fees, etc., has to be compiled.

The amount needed to fund the expenses is divided between owners, according to the participation quota. When divided into12 months, the individual levies are established. At the Annual General Meeting the proposed budget is approved, with or without amendments.

Various factors contribute to the variance experienced with the levies of different Sectional Title schemes. The size of the complex, the expensiveness of the maintenance, the area, facilities e.g. swimming pools, etc., all contributes to the individuality of each complex.

The Trustees may impose a special levy for major repairs, unforeseen expenses, etc.

Insurance

The insured value of the buildings is calculated according to current building costs per square meter, times the total floor area of the complex. Provision must also be made for common property such as outbuildings, walls, carports, etc. Although the stand isn't insured, as the idea is that the soil cannot be destroyed, the cost of demolition and the removal of rubble must be kept in mind.

It is important not to be under insured, as an average adjustment will be effected with major claims.