What is not to like about living in a secure, closed community where someone else is responsible for mowing the lawn, watering the garden, fixing the driveway, painting the house and keeping track of all the maintenance bills?
A whole lot of South African's love the idea. More than two million South Africans are already living in sectional title homes - from Cape Town to Koekenaap. And according to the bean counters, sectional title homes will surpass free title homes in number by the year 2020. Sectional title living is here to stay!
"So what is this 'Sectional Title' thing, and where can I get mine", you ask? Well, sectional title is just a name for a relatively new way to own property.
What is sectional title?
Usually, when you buy a house, you buy the land - along with the buildings and other improvements to the land. But with sectional title, you typically buy the inside of a building (or a portion thereof), along with an undivided share in the land on which your section is built. The section owners collectively own all of the common property, sharing the rights and responsibilities such ownership brings.
What is common property?
The land and improvements that don't form part of any of the sections in the sectional title scheme is called the "common property". A section owner might also receive a right to claim part of the common property for his/her exclusive use.
What is exclusive use?
You might receive an exclusive right to use a part of the common property, such as a fenced garden that adjoins your section, but you don't own that garden outright - and never will.
Your right of exclusive use is granted to you by all the owners in the sectional title scheme. No other section owner has the right to use your exclusive-use-area, even though they may own a share in it. Your "exclusive use" is a real right that might be registered in the deeds office, if the body corporate agrees.
What is a body corporate?
The section owners are all members of a "body corporate" that makes decisions regarding the management of the common property.
If you buy a sectional title unit, you automatically become a member of the body corporate. The body corporate is the legal entity that owns and controls the common property in the sectional title scheme. And no, you cannot "resign" from the body corporate, except if you sell your section in the sectional title scheme. (See, I know what you're thinking!)
The members of the body corporate usually meet at an annual general meeting, where they elect trustees who will be responsible for the day-to-day running of the sectional title scheme. The trustees are responsible for stuff like administration, maintenance, management and the finances of the sectional title scheme.
The trustees can appoint a sectional title managing agent to assist them in this task. And they usually do so, because the trustees are just people like you and me (with their own lives) and managing a sectional title scheme can really eat into your free time.
Luckily the trustees can pay for all these things from the monthly levies.
What are levies?
Owners of sections in the scheme pay monthly levies, which are pooled to pay for the expenses of the sectional title scheme. These expenses can include maintenance of the common property, services, security and so on.
At the moment the sectional title levy might still include the municipal rates, water and electricity, but from July 2008 municipalities have to issue separate bills to all the individual section owners in a sectional title scheme. The deadline for the new legislation is July 2008, but some sectional title schemes have already switched to separate billing, and some municipalities are already implementing changes to their procedures to comply with the new law.
The amount of levy a section owner pays is usually calculated according to the size of the section he/she owns. The body corporate sets an annual budget, and that amount is divided between all the section owners according to the "participation quota" of their sections. The allocated annual levy is then divided into twelve monthly levy payments.
What is a participation quota?
When the sections are registered in the sectional title register at the deeds office, a land surveyor has to provide accurate area measurements for each of the sections. The participation quota is an expression of the area of a section as part of the total area of all the sections.
For example: The sections in my sectional title scheme have a total area of 200 square metres. My section has an area of 10 square metres, which means that my participation quota is 0.05.
(The participation quota is used for more than just calculating the monthly levy, but you'll have to read about that in another article about sectional title voting.)
Why sectional title?
I can see you scratching your head and wondering why people always try and make life difficult for themselves. The concepts mentioned above are very new and many people have trouble getting used to them. But there are real advantages to living the sectional title lifestyle:
- Maintenance of the grounds is someone else's problem.
- Your neighbours cannot do crazy things to their homes and bring down your property value in the process.
- You only have to worry about making the inside of your house look pretty - the outside is taken care of.
- The costs are lower, because they are shared between many section owners.
Why not sectional title?
There are two sides to every coin - and sectional title is no exception. There are disadvantages to owning sectional title property:
- You cannot do whatever you like with, to, in, or outside your section in a sectional title complex. There are rules to follow.
- You cannot extend your section (or change the outside) without the special permission of "all" the other owners.
- Other people will decide when you have to spend more money on repairs or upgrades on the common property.
- All the owners are jointly and separately responsible for any expenses or debts incurred by the body corporate. (That means it IS your problem if anyone else doesn't pay!)
- There are "issues", meetings, votes and sectional title politics that you wouldn't need to worry about if you owned a freehold home.
Buying sectional title property
If you are looking to buy into the sectional title lifestyle, there are a few basic things you should always keep in mind:
Buying sectional title property is NOT like buying freehold property.
Make absolutely sure of what you buy. Get a copy of the sectional title plan and study it carefully. What is included in the section and what is not?
Don't take a seller's word about any exclusive use area. If the section includes any exclusive use rights, there will be written proof in the sectional title register or available from the trustees.
Don't take the seller's word for the possibility of extending the section. If the body corporate has approved, there will be written proof.
Don't take the seller's word about the rules of the sectional title scheme. Get a written copy of the rules from the trustees or the managing agent.
Don't take the seller's (or the trustees/managing agent's) word for the financial health of the sectional title scheme. Inspect the books and check for yourself, or have an expert do it for you. You don't want to pay a whole lot of money for an undivided share in a sectional title debt trap, after all!
Sectional title is here to stay
Sectional title is here to stay, for obvious reasons. Sectional title ownership has long ago moved along from just being a way to own an apartment in a block of flats. Developments with freestanding residential units, commercial developments, industrial complexes, holiday resorts, caravan parks, old age homes and even hospitals are sectional schemes, nowadays! But because sectional title is still a relatively new form of property ownership, you will have to do your homework thoroughly.
Sectional title living is not as "lock up and go" as some people like to believe. It is still immovable property, with all the rights and responsibilities that comes with owning real estate. So, if you don't want other people to take all the decisions without having a say, be active as a member of the body corporate and let your vote count.
Sectional title is here to stay - and you are likely to stay in sectional title property at some stage of your life. So, be prepared!
