Sectional Title Scheme – FAQ

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What is Sectional Title?

A Sectional Title Development Scheme (usually referred to as a Scheme) provides for separate ownership of sections of a property by individuals.

These schemes fall under the control of the Sectional Titles Act, No 95 of 1986, which came into force on 1 June 1988. It is the Act under which an individual can hold Title to a Section of a building. This Act replaced an earlier Act (No. 66 of 1971).

Is Sectional Title unique to South Africa?

Yes and no! Sectional Title is the name given to this form of ownership in South Africa. In other parts of the world sectional ownership is known by other names, but many of the basic principles are similar.

What does an owner own?

In buying into a scheme, a purchaser acquires a Section (or sections), and an undivided share of the Common Property. These are collectively known as a Unit. A section in a residential sectional scheme is usually a flat or townhouse, but may also be a garage, domestic staff room or external storeroom.  In many schemes, the garage and external rooms are not sections, but are parts of the common property of which individual owners have Exclusive Use.  A section extends to the mid-point of outer or dividing walls, the lower part of the ceiling and upper part of the floor. The outer walls, roof, space above the ceiling and foundations are not part of the owner's section.

Let us look at some practical examples:

A purchaser who buys a townhouse or flat along with a garage that is shown on the sectional plan as being part of the section will acquire one section.

A purchaser who buys a townhouse or flat along with a garage that is shown on the sectional plan as a separate section will acquire two sections.

A purchaser who buys a townhouse or flat that has the exclusive use of a garage will acquire one section and an exclusive use area. As we "will see later, there are various types of exclusive use areas.

A sectional plan is a plan which has been approved by the Surveyor General for the area in which the scheme is situated, and which shows the sections and common property. It must not be confused with a building plan approved by the local authority or a sketch plan used by developers and estate agents.

What is Common Property?

The common property comprises those parts of the scheme that do not form partof any section. Driveways, gardens, swimming pools, corridors, lifts, entrance foyers, parking bays, outer walls, foundations and the roof are all part of the common property. As mentioned above, some parts of the common property may be designated as exclusive use areas.

What is an exclusive use area?

Often this will be a garden, patio, or parking bay, but may also be a garage or storeroom, that the owner does not own but will have been granted exclusive use.

There are several ways that exclusive use areas can be created and protected. Under the 1971 Act, these areas were usually created under the Schedule I rules of the scheme. When the current Act came into effect in 1988, a more sophisticated way of creating exclusive use was introduced, resulting in registered exclusive use areas, deemed to be real rights, capable of being bought, sold and bonded.

In the opinion of many property practitioners, this method was too sophisticated for general use, resulting in an amendment to the current Act that introduced exclusive use areas created under the current rules. Please note that exclusive “use areas created under rules do not enjoy the same status as registered exclusive use areas. However, for most purposes, the method is adequate and much cheaper to implement. Registered exclusive^ use areas will be shown on the sectional plan, while those created under the rules will be reflected in the rules of the scheme. Developers and bodies corporate can choose either method to create exclusive use areas.

It is very important for a purchaser to establish exactly what he or she is buying before committing to the purchase. If it is not shown on the plan or in the rules, it probably does not exist! The Sectional Title Buyer's Checklist, which is included in this booklet, covers all the major points.

Who owns the Common Property?

The common property is owned jointly by all the owners of units within the scheme. Collectively, these owners are known as the Body Corporate. The common property is controlled by the body corporate. There are no exceptions to this rule. The practical implication of this is that even though parts of the common property are exclusive use areas, these areas are still controlled by the body corporate and are therefore subject to the rules of the scheme. These rules might prohibit "braaing" in an exclusive use garden or balcony, restrict the type of fence or wall erected around a garden, or prevent the installation of a pool or spa bath without the consent of the trustees or the other members of body corporate.

What is the Body Corporate?

The body corporate comes into existence as soon as the developer of the scheme transfers a unit to a new owner. From then on, every purchaser becomes a member of the body corporate when transfer of his or her unit is registered. All registered owners of units in a scheme are members of the body corporate. The body corporate controls and runs the scheme in accordance with the requirements of the Act and rules.

Day-to-day administration of the scheme is vested in Trustees who are appointed by the body corporate. Major decisions regarding the scheme are made by the body corporate, usually at the Annual General Meeting (AGM), or at a Special General Meeting. At these meetings, matters that affect the scheme are discussed. Budgets are approved, rules can be changed, and trustees are appointed, often accompanied by lively discussion.

Every member of the body corporate is entitled to vote at these meetings, providing that the member is not in arrears with his or her levy payments or in serious breach of the conduct rules. Members in default can only vote for Special or Unanimous Resolutions. Unless otherwise determined by the developer at the time that the register was opened, or subsequently by the body corporate by means of a special resolution, an individual members voting power is governed by the member's percentage ownership of the entire scheme. This percentage is known as the Participation Quota (PQ).

What is a Participation Quota?

In a purely residential scheme, a Participation Quota (PQ) is worked out mathematically and is an expression of the size of a section in relation to the sum of the size of all of the sections. In a scheme registered under the current Act, this figure is expressed as a percentage to four decimal places. Under the earlier Act, the figure was expressed as a decimal fraction. As an example, a section of 120 m2 in a scheme in which the sum of all the sections is 1000m2 has a PQ of 12,0000% in a scheme registered under the 1986 Act or 0,120 under the 1971 Act.

In a combined commercial and residential scheme the PQs for the commercial sections are nominated by the developer, while those for the residential sections are calculated according to the size of a section as mentioned above. Participation Quotas are shown on the sectional plan of the scheme.

The Sectional Titles Act allows the developer of a sectional scheme to nominate values, which differ to the PQs. This right passes to the body corporate upon establishment and requires a special resolution from the members and the written consent of any owner adversely affected by the change. It must be emphasised that these nominated values do not replace the PQs shown on the sectional plan, but where such values exist, obligations to pay and voting rights will be calculated in accordance with these values and not the PQs.

Who are the Trustees?

Trustees are appointed by the body corporate at an AGM. They are usually owners of units in a scheme who have been entrusted with the task of looking after the scheme on a day-to-day basis. Although neither the Act nor prescribed rules impose a maximum number of trustees, the minimum number of trustees for a scheme is two. Ideally, a trustee should possess skills or qualities that will be of benefit to the scheme. Accounting, bookkeeping or legal knowledge, organisational abilities,knowledge of electrical or mechanical matters and PC skills are much in demand, and can save the body corporate a lot of time, trouble and money.

It is permissible to appoint a trustee who does not own a unit in the scheme, although this is neither a common practice nor is it usually desirable. The majority of trustees must be owners, or the spouse of an owner of a unit in the scheme. An employee of the body corporate, such as a caretaker or supervisor, may not be a trustee. Trustees are volunteers who in most circumstances may not be paid for acting as a trustee. An exception to this rule is that a trustee who is not an owner may be remunerated at a rate decided by the body corporate. However, all trustees are entitled to reimbursement for all legitimate costs incurred by them in execution of their duties. At the first meeting of the trustees after being appointed, the trustees elect a Chairman who usually holds office until the next AGM.

What are the duties of the Trustees?

The trustees take over the functions and duties assigned to the body corporate by the Act and rules, but are always subject to any directions or restrictions imposed by the body corporate at a general meeting. Trustees are required to meet regularly and to keep minutes of all their meetings. These minutes are open to inspection by any member of the body corporate. Any member of the body corporate is entitled to attend and speak at trustees' meetings, but may not vote at that meeting.

Trustees acting in good faith are indemnified by the body corporate. Trustees who are grossly negligent or act with mala fide (bad faith) do not enjoy such indemnity and can be held personally liable for their actions. The chairman of trustees has a casting vote at a trustee meeting but not at a general meeting of the body corporate.

Who makes the rules?

At the inception of a scheme, Management and Conduct Rules are established. These rules form Annexures 8 and 9 to the 1986 Sectional Titles Act and may have been amended by the developer before the register was opened. As their names imply, the management rules control the running or management of the scheme, while the conduct rules lay down guidelines for the conduct of owners and occupiers, their guests or tenants.

In schemes that were established under the 1971 Act, the rules were made in accordance with the provisions of that Act and were called Schedule I & II Rules. In schemes in which the body corporate did not amend the standard rules of the 1971 Act, the management and conduct rules of the new Act automatically replaced those rules. In schemes in which amendments to the Schedule I & II rules were registered with the Registrar of Deeds for the area in which the scheme is situated, they may still be in force. An excellent and detailed discussion regarding rules will be found in "The Sectional Title Handbook", by Graham Paddock.

Can the rules be changed?

Yes. The body corporate can change or amend the rules, providing that these changes are not against the intentions or spirit of the Sectional Titles Act.

The procedures that must be followed before rules can be changed is clearly defined in the Act and rules. Proposed changes must be put to members of the body corporate at a general meeting, at which members will be able to discuss the proposed changes before being asked to vote for or against them.

Amendments to management rules require a Unanimous Resolution, while conduct rules may be changed by a Special Resolution. These amendments will not become effective until filed at the Deeds Office.

Why are there different types of resolution?

The body corporate has to vote on a wide range of choices that can affect the running of the scheme. These range from simple decisions such as voting for trustees, approving budgets and other routine matters, to changing rules and making decisions that affect the common property. There are three types of resolution. Simple decisions require agreement from a majority of owners. Special decisions require a higher percentage and important decisions require unanimous consent. In a later section of this booklet, resolutions will be discussed in detail.

How do owners vote?

There are two ways in which members of a body corporate can exercise a vote at meeting of owners. The first of these is by a show of hands in which case an owner will have one vote, irrespective of the number of units that he or she may own. This form of voting is used for ordinary resolutions. The second way of voting is by a poll based on Participation Quotas (PQs). Any owner who is entitled to vote may demand a vote by poll, even after the result of a vote by a show of hands has been declared. Voting for a special resolution must be by number and by poll based on PQs. If an owner's proprietary rights are adversely affected, the resolution will not become effective until the affected owner has agreed in writing to the resolution.

When a vote is taken at a general meeting of a body corporate and the voting is deadlocked, the chairman of trustees does not have a casting vote. Please note that when voting for an unanimous resolution at a general meeting of a body corporate, an abstention is deemed to be a vote in favour of the resolution. This does not apply to a door-to-door poll of owners.

How do the costs of running the scheme get paid?

The costs incurred in running a scheme have to be paid by the body corporate.

These costs include:
Rates, taxes and other charges
Insurance premiums
Repairs and maintenance of the common property
Wages and salaries of cleaners and other staff
Water and electricity used on the common property
Provision of security or other services

These costs are paid by individual owners in the form of a monthly levy, calculated in accordance with the Participation Quota or nominated value for their unit. The Act requires an owner who has the benefit of an exclusive use area to make an extra contribution to cover rates and taxes, insurance and maintenance of the exclusive use area. This applies to all registered exclusive use areas and to exclusive use areas created under the rules of the 1971 Act, but may not apply to those created under the rules of the current Act.

In addition to the above, the body corporate is obliged to establish a fund for future maintenance and unexpected expenses. The size of this fund is not specified in the Act, but a wise body corporate will make sure that the fund is adequate for the size of the scheme and the present condition of the property. If the fund becomes excessively large, the Act does not allow any part of the excess to be refunded. However, the excess could be used to subsidise future levies or to improve the common property.

How is the levy calculated?

At the inception of a scheme and again before every AGM, the trustees have to prepare a budget for the following year. Before the AGM, the proposed budget must be sent to all members of the body corporate for their consideration and for subsequent discussion at the meeting. The body corporate can either accept the budget or ask for changes to be made. Once the budget has been accepted, the total annual cost is divided into monthly amounts and each owner is then "levied" a monthly amount, as mentioned above.

Can the levies be changed at other times?

Yes. In an emergency, the trustees can impose a Special Levy to cover unforeseen expenses, such as essential repairs and maintenance. In addition, the body corporate can approve a special levy to cover the cost of improvements to the common property. Special levies must be calculated according to participation quotas. The procedures that have to be followed before improvements can be approved are prescribed in the rules.

What is a Managing Agent?

Managing and administering a scheme, particularly a large scheme, is complicated and time consuming. Occasionally, the body corporate and trustees undertake the entire task, but unless the body corporate is unusually well endowed with specialised knowledge and talents, this is very seldom successful. Most Bodies Corporate appoints a Managing Agent, usually a company or close corporation that specialises in this aspect of Sectional Title administration. Estate agency legislation requires a managing agent who handles body corporate money to register with The Estate Agency Affairs Board and hold a Fidelity Fund Certificate issued by the Board.

The managing agent sends out monthly statements, collects levies and all other money due by owners to the body corporate. On behalf of the body corporate, the managing agent keeps the books, recovers unpaid debts, prepares the annual budget, obtains quotations for repairs and maintenance and sends out notices. The agent also assists the trustees with the numerous time-consuming tasks that arise in administering a scheme. To protect and guide the Body Corporate, the managing agent must have a sound and comprehensive knowledge of the Sectional Titles Act and Rules. A good managing agent can save the body corporate a lot of time, trouble and expense.

May I keep a pet?

It is not surprising that pets are covered by the very first rule (Rule 1) of the conduct rules, as much unhappiness and heartache have been caused by a failure to understand this rule. An occupant of a Sectional Title unit may not keep a pet in a scheme without the written consent of the trustees, which consent the trustees may not refuse without good reason. In granting consent trustees may impose special conditions and may withdraw the consent if the pet causes a nuisance to other owners. Passions run high when it comes to pets! Please note that often a body corporate will, by special resolution, amend the conduct rules and ban all or certain types of pets, in which case the trustees must follow the amended rule.

May I extend my section?

Yes, but only with consent. An owner who wants to extend the limits of his or her section must first obtain the consent of the body corporate by a special resolution of the members. The owner applying for permission will be responsible for the costs of amending the sectional plan of the scheme, recalculating all the participation quotas and arranging to have the amended plan registered. When granting permission, the body corporate must take into consideration the effect that the extension will have on the harmonious appearance of the scheme and may well impose restrictions in that regard. If the proposed extension will affect the PQ of any section by more than 5%, the applicant will have to obtain the consent of all the bondholders. Section 24 deals with extensions of sections.

May I make alterations to the inside of my section?

Generally, it is not necessary to obtain permission to make alterations inside a section. However, if these alterations involve structural changes or affect the electrical or water supply or the drainage system, it is essential to obtain expert advice. If the changes involve major structural changes, such as the removal of a wall, extra care must be exercised as the stability of the building might be jeopardised. Please refer to section 28 of the Act and management rule 68(1) (iii).

As a matter of courtesy, you should advise your neighbours if the alterations are going to cause them any inconvenience or excessive noise. Builders can cause a lot of noise and dust! Many owners renovate their kitchens and bathrooms, add extra cupboards, re-tile or re-carpet floors without causing any problems. Please remember that all changes that affect the common property require consent.

May I install a security gate?

Yes. An owner can fit a security gate or any other security device for the protection of his or her section. However, as the security gate or other device will be visible from parts of the common property, the trustees must approve in writing the design and appearance of the gate or device. Conduct rule 4 refers.

May I fit an outside awning?

As the outer walls form part of the common property, body corporate consent is required. It is common practice to fit awnings to north and west windows and it would be very unreasonable to refuse permission. However, the harmonious appearance rule (rule 68(1) (iv)) will apply.

May I fit a different type of front door?

As the front door is visible from common property, in the interests of harmony it must conform to an approved design.

May I change the style of my windows?

Windows are generally considered to be part of the common property and are always visible from the common property. Therefore, body corporate consent is required, and would probably not be granted.

May I enclose my balcony?

The question regarding enclosing balconies is a very complicated one.

A balcony may be:
Part of a section.
Part of the common property over which the owner has registered exclusive use.
Part of the common property over which the owner has rule created | exclusive use.
Part of the common property over which exclusive use does not exist.
Even if the balcony forms part of a section, it is by no means certain that it can be enclosed. A balcony is usually considered to be a non-habitable area.
Enclosing the balcony would convert it to habitable area, in which case local authority permission would be essential and might not be granted.
Enclosing a common property balcony, whether or not it is an exclusive area, would be seen as an extension to the section and would require a special resolution from the members of the body corporate as prescribed in section 24 of the Act.
In any event, enclosing a balcony would alter the outer appearance of the scheme and would be affected by the harmonious appearance rule.

May I build a wall around my exclusive use garden?

The wall around an exclusive use garden forms part of the common property. Therefore, body corporate consent is necessary.

May I improve my exclusive use area?

Many sectional owners carry out improvements to their exclusive use areas, ranging from brick paving to the construction of a splash pool or spa bath. Improvements to registered exclusives use areas require consent from the trustees, and may not be withheld without good reason. Rule created exclusive use areas require consent from the body corporate before improvements can be implemented.

When granting consent, trustees and bodies corporate should include a condition that any damage caused by the improvement will be for the account of the owner of the section and not the body corporate. An example of this would be damage caused to foundations by flooding from a crack developing in a swimming pool.

May I extend my patio?

If the patio forms part of a section, a special resolution would be required. If the patio is part of the common property adjacent to a registered exclusive use area, consent of the trustees would be required. In all other cases, a unanimous resolution from the members of the body corporate is necessary.

May I install a jacuzzi inside my section?

Apart from structural problems caused by the weight of the installation and the water in it, the installation of a spa bath (Jacuzzi) requires alterations to the plumbing and electrical installation, so permission is needed. A spa bath may require more electrical power than is available in your section, in which case it might be necessary to provide a three-phase supply to the section. This is a major task and would certainly require professional advice. The problem of noise from the pump must also be considered.

May I fit an air-conditioner?

Air-conditioning units that take air from outside the building are partly fitted on the common property therefore permission is necessary. Another consideration is the noise generated by the compressor in the air-conditioner. These compressors often cause vibrations, which will certainly affect your neighbours. In a block of flats, compressor and fan noises travel vertically and horizontally and will affect the flats above and below as well as the flats on either side. These noises may not be intrusive during the day, but will certainly prove to be a problem during the night.

May I install under-floor heating?

Under-floor heating consumes a lot of electrical power. When fitted to a large flat or townhouse, the power requirements may be too great for a normal single-phase electrical supply, necessitating the installation of a three-phase supply. Professional advice is essential. Skirting or freestanding heaters are more versatile and easier to control, and usually more economical to run.

May I install my own satellite dish?

No. Apart from the fact that a satellite-receiving dish must be mounted outside on the common property, an owner cannot do anything that will affect the harmonious appearance of the scheme. Individual dishes, visible from outside the building would without doubt be very inharmonious and therefore cannot be allowed.

May I sell my unit?

Yes, of course you may. However you must notify the body corporate that you have sold your unit. Please note that the Act requires an owner of a Sectional Title unit to notify the body corporate of any change in the status of a bond registered over the unit, such as the registration of a second bond, or the cancellation of an existing bond.

May I rent my unit to a tenant?

Yes, but please remember that as the owner of the unit, you remain a member of the body corporate and are responsible for payment of the levy. As you are also responsible for the conduct of your tenant, it is advisable to furnish the tenant with a copy of the Management and Conduct rules. You must notify the body corporate that a unit is being rented to a tenant.

Are the trustees as powerful as they seem?

No, they are not. The trustees are appointed by the body corporate to look after the day-to-day running of the scheme and to accept the instructions of the members of the body corporate. A body corporate is not subject to the Companies Act and it is important that the trustees are not seen as Directors of the body corporate. A trustee who is an owner or spouse of an owner may not derive any financial or economic benefit from his or her position as a trustee.

The body corporate can remove a trustee from office at a general meeting. A trustee who is declared insolvent or of unsound mind, or is convicted of any offence involving dishonesty, is disqualified from holding office. The role of a trustee is a responsible one, and very time-consuming. It is considered by many to be a thankless task. Good trustees are a valuable asset in any scheme and deserve support and appreciation from members of the body corporate.

What happens if I break the rules?

The Act requires the trustees to make sure that the owners in a scheme adhere to the rules. Where the breach of the rules involves a failure on the part of an owner to maintain his or her section in good condition, the body corporate is entitled to carry out such repairs or maintenance and to charge the owner for the costs involved.

The prescribed management rules allow unresolved disputes between owners or between an owner and the body corporate to be referred to arbitration. This will be discussed in detail in a later section.

Most owners are reasonable people and are prepared to comply with the rules, which are there to benefit all the owners. Please note that any owner who, in spite of warnings, is in breach of the conduct rules may not vote at a general meeting (except for special or unanimous resolutions).

What should I do if my neighbours break the rules?

If your neighbours consistently break the rules, by making too much noise or being a nuisance in some other way, you should report them to the trustees. Please remember | however that you should involve the trustees only in the case of serious disagreement, and not in trivial disputes. As mentioned above, unresolved disputes between members or between members and the body corporate must be referred to arbitration.

What happens if I fail to pay my levy?

The body corporate can take action in an appropriate Court to recover unpaid levies. In extreme cases, the Court may order the sale of the owner's movable assets, or even the sectional unit itself. As all owners in a scheme have to pay a levy, any owner who fails to pay his or her levy, while continuing to enjoy the benefits of living in the scheme, is doing so at the expense of all the other owners. An owner who is in arrears with his or her levy may not vote at a general meeting of the body corporate, except for proposed special or unanimous resolutions.

The body corporate is entitled to charge interest on arrears. All costs involved in recovering money owed by an owner to the body corporate can be claimed from the owner.

What about insurance?

The Sectional Titles Act requires the body corporate to ensure that the buildings are insured to the value of their replacement cost. The insurance must cover all the sections and all improvements to the common property. The premiums for this insurance form part of the monthly levy. If you feel that your unit is worth more than the amount for which it is insured, you are at liberty to take out an extra policy to cover the perceived shortfall. Please note that the body corporate insurance only covers damage and destruction of the buildings.

It does not cover the contents of your section. You must make sure that your furniture and personal belongings are separately and adequately insured by means of a suitable policy.

What can I do to help?

The success or failure of any scheme is in the hands of the body corporate. As an owner, you can make a difference. Don't be complacent - be involved. Play an active part in the day-to-day affairs of your scheme. Attend General Meetings, or if you cannot attend, give another owner your proxy. Keep your section in a state of good repair and keep your exclusive use areas neat and tidy. Show consideration to your neighbours and use your section and the common property in a way that will not interfere with other residents' rights to use theirs. Above all, be a good neighbour.