UNDERSTANDING SECTIONAL TITLE OWNERSHIP OF PROPERTY – simplified
Conventional property ownership
In terms of our common law, land is purchased and sold and the boundaries of land are determined by a Surveyor. Everything that is fixed to the land such as a building (a house) or crops that grow on the land, form part of the land.
How did Sectional Title come into existence and how does this differ?
Due to urbanization, there was a need to create a new form of ownership, where the dominant right is not a right to the land, but the right to own a unit in a building, or a unit on a piece of land which may or may not be attached to each other, over land which is in common ownership.
The Sectional Titles Act was first promulgated in 1971 to make provision for this new type of property ownership and which enabled owners to, for example, use the property as security to obtain bond finance. Bonds can only be registered against land with the improvements thereon (conventional) or against sectional title units.
A developer buys a piece of land and erects a building or separate units on this piece of land.
Upon registration of the first two units in the Deeds Office, the Sectional Title Register is opened in the Deeds Office and the Body Corporate comes into existence.
All units are shown on the Sectional Title Plans. Sectional Title Plans must not be confused with municipal plans. The Sectional Title Plans simply show the footprints and outline of the Sectional Title Units on the land and delineate the space of the Unit with reference to its inner walls, ceiling and floor to determine ownership thereof.
Who owns the land?
The underlying land is owned jointly by all the sectional title owners, and it is not possible for a sectional title owner to own the land upon which his or her unit has been constructed, under a separate title.
The underlying land thus forms part of the common property (co-owned by everybody) which means the foundations of each unit also form part of the common property.
What does a Sectional Title Unit comprise of?
A Sectional Title Unit is defined in the Sectional Titles Act 95 of 1986 as:
A section together with an undivided share in the common property apportioned to that section in accordance with the quota of the section (the ‘pq’).
What is a Section and how is a Section defined?
Section 5 of the Act states that a section must be defined on the sectional plan as:
‘a cubic entity with reference to the floor, walls and ceiling thereof’ and which is shown on the Sectional Title Plan (ie the footprint of the property).
The floor area of each section measured up to the median line of its boundary walls must be indicated on the sectional plan. The boundaries of the cubic entity are the median lines of the outer vertical walls, forming the vertical boundaries, and the median lines of the floor and ceiling, respectively forming the horizontal boundaries. (Sec 5(6).
An ‘open’ area such as an adjoining balcony as shown as part of the section on the Sectional Plan can be included as part of the section if it is attached to the section and reflected as such on the Sectional Plan. (Section 5(6).
A non-contiguous part of a building, eg a storeroom or a garage elsewhere in the complex, can also form part of the Section provided it carries the same number as the Section on the Sectional Plan.
An open space such as a garden or a parking bay will not form part of a unit but an owner can be given the Exclusive Use thereof, by means of an endorsement of the Sectional Title Deed, alternatively, such parking bay or garden can be allocated by the Body Corporate to such owner in terms of its rules, for the Exclusive Use of such owner, to the exclusion of other owners.
A Section is thus, in essence, the delineation of a space, and the foundations and the roof do not form part of the Section but form part of the common property which is jointly owned by everyone.
The actual land underneath a unit likewise does not form part of the Unit, but the sectional owner’s undivided co-ownership share in the land forms part of the Unit.
How do the owners relate to each other, and make decisions with regard to their co-ownership of the common property?
By operation of law, once a Sectional Title Register has been opened, a Body Corporate comes into existence and a developer is obliged to call a meeting, for the appointment of trustees to represent the Body Corporate and make decisions on its behalf.
A Body Corporate is thus a legal entity which can sue or be sued, enter into contracts and so on. As a corporate entity (similar to directors of a company) decisions are made by duly appointed trustees.
In smaller complexes, it may be advisable for all owners to stand as trustees for purposes of making joint decisions affecting everyone, and a chairman needs to be appointed who would usually chair meetings.
Can owners decide not to have a Body Corporate?
No. A Body Corporate has various tasks and responsibilities which it can only perform through its duly elected trustees, similar to a Board of Directors of a company. A company must have directors who makes the decisions on behalf of the company and cannot exist without directors.
Similarly, a Body Corporate cannot function as such without trustees.
Consequences of not having a functioning Body Corporate
- Properties cannot be sold and transferred without levy clearance certificates. Levy clearance certificates must be issued either by a Managing Agent or by the Trustees of the Body Corporate
- The entire complex which comprises all the Units and the Common Property (ie the underlying land, roofs and outer walls of each Section) must be insured. This is set out in the Management Rules of the Body Corporate and the requirements for insurance are set out in the Sectional Title Management Act.
The owners, in the absence of duly appointed trustees to manage the Body Corporate, run the risk of liability for damage to other units in the complex should there not be adequate insurance over the complex as a whole. Practical example: if a roof blows off one unit in a storm, all the owners would be legally liable to pay for such damage in the absence of insurance cover or in the event of a repudiation of an insurance claim.
HOW ARE LEVIES DETERMINED AND PAID?
Levies are determined to have reference to the participation quota, or floor area ratio, of each Unit. This means that the levy of an owner of a smaller unit shall pay a pro-rata smaller levy, or conversely, a bigger unit shall pay a bigger levy.
Owners can also elect to each carry the cost of their own Section and Exclusive Use areas, and to limit the expenses of the Body Corporate to necessities such as the payment of insurance premiums. In such event, the Management Rules and Conduct Rules of the Body Corporate should be amended to make provision for this. Such amendments would also have to be approved by the Ombudsman and files with CSOS in terms of the Community Schemes Ombud Service Act, 2011 (Act No 9 of 2011)