Creating A Sectional Title Scheme

Although the walls and roof might have been standing for a while already, a sectional title unit only legally comes into existence when the sectional title plan has been registered and a sectional title register for the scheme has been opened. The sectional title plan outlines exactly what constitutes a unit, while the sectional title register keeps record of who owns what in the sectional title scheme.

A buyer who buys a unit in a sectional title development, or bought a unit from plan, can only take transfer of the new unit once the sectional title plan has been approved the Surveyor-General's office, and the sectional title register has been opened with the deeds office.

Sectional Title Land

The sectional title scheme may consist of a single piece of land, adjoining pieces of land, or pieces of land that are physically separate. But the sectional title units must be located on a single piece of land, or adjoining pieces of land that have been notarially tied to each other. All the land for the sectional title scheme must be registered to one person (a natural person or a legal entity).

Draft Sectional Plan

Before a sectional title register can be opened, the developer has to submit a draft sectional plan to the Surveyor-General for approval. A number of prescribed documents must accompany this draft plan submission. The Surveyor-General will only approve the draft sectional plan if the application has been prepared as prescribed in the Sectional Titles Act 95 of 1986.

The draft sectional plan must be prepared and signed by a registered land surveyor or architect. The numerical and other data recorded on the draft sectional plan has to be accurate. A land surveyor has to correctly indicate the land boundaries according the Land Survey Act 9 of 1927, as well as the location of the relevant buildings in relation thereto. Any exclusive use area, which does not have permanent physical features as boundaries, also has to be outlined and signed by a land surveyor.

The Sectional Titles Act requires that the draft sectional plan be prepared from an actual, accurate measurement taken by, or under the direction of, the person preparing the draft plan. This physical measurement is needed, because the building plans and other diagrams often differ from the actual sectional title site.

Obviously, the land surveyor or architect must have passed the Chief Surveyor-General's required examination in connection with the preparation of draft sectional plans, or the Surveyor-General shall not accept the draft sectional plan.

The draft sectional plan has to indicate the name of the scheme, include a scale plan of each storey in the buildings, define the boundaries of each section in the building or buildings, and distinguish each section by a number. The common boundary between any sections, or a section and the common property, is the "median line" of the dividing floor, wall or ceiling.

The draft plan should also indicate the floor area of each section, correct to the nearest square metre, and the total floor area of all the sections. Any exclusive use areas have to be outlined in the draft section plan in the prescribed manner. A schedule to the draft plan should specify the participation quota of each section, and the total of the quotas of all sections shown on the draft section plan. This schedule should either be endorsed upon, or annexed to the draft section plan.

A section may consist of physically separate parts of a building or buildings.

Leased Buildings

If an existing building is being converted to a sectional title scheme, and it is wholly or partly let as residential property, the developer must call a meeting with the tenants who have lease agreements, before he is allowed to submit a draft sectional plan. The meeting must be held in the building itself, or another building reasonably close-by, within the local authority's area of jurisdiction.

Letter Of Notice

The developer must inform the tenants in writing, by registered mail, or personal delivery, that the unit they are renting will be sold. The notice of the meeting must be delivered to the tenants at least 14 days before the meeting date.

This letter must be accompanied by an offer to sell the units to the respective tenants. A certificate that contains the prescribed information about the buildings and the proposed sectional title scheme must also accompany the letter.

The offer to sell must contain all the terms of the proposed sale, and the tenants must be given 90 (ninety) days to accept the offer to sell. If the relevant units are rent-controlled premises, under the Rent Control Act 80 of 1976, the tenants have 365 days to decide to buy the proposed sectional title units or not.

The Meeting

The developer or his authorised representatives must be available at the meeting, to provide the lessees with all the information of the proposed sectional title scheme they may reasonably require. The lessees also have to be informed of their rights, as set out in section 10 of the Sectional Titles Act. So, the meeting should provide information about the proposed sectional title scheme, as well as the tenants' pre-emptive rights to buy the units they are leasing.

The only time that a developer does not have to go ahead with such a meeting with the lessees is if the prescribed procedure had been followed, but all the tenants refused in writing to buy the units they occupy. These written statements must set out the lessee's rights, and clearly state that they do not wish to purchase the units. A conveyancer also has to certify in writing that such statements have been received for all the units in question.

Selling Proposed Leased Units

The developer would only be allowed to sell these leased units on the open market if the lessees have either declined to buy their rental unit in writing, or lets the pre-emptive right (option) expire without accepting the offer to sell. If a tenant refuses the offer, or has not replied within the prescribed period, the developer is still not allowed to sell the property at a lowered price, to anyone else, for a period of 180 days. That is, except if the developer offered the unit to the tenant again, and he refused, or had not accepted the offer to sell within 60 (sixty) days after this new offer to sell.

The rents for tenants may also not be increased for the 180 days mentioned earlier, or the 60 days, where applicable, whichever date occurs last. Provisions of the Rent Control Act in regard to any controlled premises will also not be affected if the lessee is 65 years old or older, and his monthly income does not exceed the maximum amount under section 52 (1) of the Rent Control Act. Such unit may only be sold to that lessee, or if it is sold to someone else, subject to the right of that lessee to continue to occupy that unit for as long as his income does not exceed such maximum amount.

A developer, who sells any leased unit without following the rules, shall be guilty of an offence, and liable for a fine up to R2 000, or up to twelve months imprisonment, or both. I'm not sure if this would apply per unit, or not, but it seems like it could turn out to be a steep sentence!

Share Block Schemes

A share block company, applying for the approval of a sectional title development scheme, need not comply with these requirements, provided that the share block company has already complied with section 11 of the Share Blocks Control Act 59 of 1980, in the last two years before their application.

Building Inspection

A qualified building inspector from the relevant local authority has to inspect the property for compliance with the town planning scheme, the statutory plan, conditions for the approval of the building plans, building regulations and building by-laws in operation at the date of erection. If the property does not comply with any of these requirements, the developer can still apply to the local authority for their condonation of such non-compliance.

The local authority may condone non-compliance to any requirements, by issuing a certificate to that effect to the applicant. But the local authority may not issue any certificate that condones non-compliance with any national building regulation, regarding the strength and stability of a building, unless a deviation has been permitted, or an exemption has been granted, in terms of section 18 (2) of the National Building Regulations and Building Standards Act 103 of 1977.

Submitting Draft Sectional Plans

The land surveyor or architect will make sure that the prescribed number of copies of the draft sectional plan is submitted for the Surveyor-General's approval. The draft sectional plan needs to be accompanied by all the prescribed certificates that state that the applicable laws have been complied to.

The Surveyor-General shall not be responsible for investigating the correctness or accuracy of any document submitted along with the draft sectional plan. But any land surveyor or architect who submits false or inaccurate documents to the Surveyor-General for approval, shall be guilty of improper conduct under the Professional Land Surveyors' and Technical Surveyors' Act 40 of 1984, and the Architects' Act 35 of 1970, as the case may be.

Opening The Sectional Title Register And Registering the Sectional Title Plan

As soon as the Surveyor-General has approved a draft sectional plan, the developer may apply for the opening of a sectional title register and for the registration of the sectional plan. The sectional title register and the sectional title plan have to be registered in the same deeds registry in which the land for the scheme is registered.

The application must include two copies of the sectional plan, a schedule certified by a conveyancer, that sets out all the title conditions and prescribed particulars, the title deed for the land, any mortgage bonds on the land, the written consent of the bond holders, the rules for the sectional title scheme, certificates for each section and its undivided share in the common property, made out in favour of the developer, and such other documents and particulars as may be prescribed. Phew! That was a mouth-full.

This is where the developer has a chance to set out the rules and title conditions that will govern the body corporate for the new sectional title scheme. Anything that the developer includes, or neglects to include now, will affect the owners of units in the sectional title scheme for some time, until the body corporate can come to agreement to apply to the Registrar of Deeds for these things to be amended. This is the time to get things right, because getting the owners to agree later, will be a mammoth task.

When the requirements of the Sectional Titles Act, and any other relevant law, have been complied with, the registrar will register the sectional title plan, and assign it a distinctive number. The sectional title register will then be opened, to register the title deeds for each unit. At the same time, the Registrar of Deeds will issue a whole lot of certificates of real rights.

Certificates of registered sectional title for each section and its undivided share in the common property, a certificate of real right for any right to extend, which the developer has reserved, and certificates of real right for the exclusive use areas, will all be issued to the developer.

The Registrar of Deeds then notifies the Surveyor-General and the local authority of the registration of the sectional plan, and sends the local authority a copy of the sectional title plan.

Once the sectional title plan has been registered with the Registrar of Deeds, it becomes part of the title deed for the immovable property of the sectional title scheme, along with the schedule that sets out all the title conditions.

Creating A Sectional Title Scheme

The buildings and the land of the sectional title scheme will now be deemed to be divided into sections and common property, as shown on the sectional plan. A sectional title scheme has just been created.

Any land, with at least one building on, can be registered as a sectional title scheme, but all the procedures and legal requirements have to be followed. Acquiring the services of professionals to handle the whole rigmarole of creating a sectional title scheme is not only advisable; the law requires it!

(Yes, "rigmarole" is a word! My mother just loves using it, and it means "a complex and ritualistic procedure" according to the Merriam-Webster's Collegiate Dictionary. So, it is perfect for describing the creation of a sectional title scheme.)