What You Need To Know About Buying Property Into Sectional Title Schemes
Ownership within a Sectional Title Scheme
A Sectional Title Scheme describes the ownership of units or sections within a complex. When you buy into a sectional title scheme, you are actually buying a section together with an undivided share of the common property and possibly an exclusive use of some of the common property. These sections are known as units, and a common example is a townhouse within a complex.
An owner of a unit is also an owner of the undivided share of the common area, which is shared by all owners of the same scheme. Common areas may include the parking area or recreational facilities. However, there are also exclusive use areas which form part of the common property but which are allocated to specific owners within the scheme for their exclusive use. A common exclusive use area might be a parking space, a private garden or a storage space.
Why buy into a Sectional Title Scheme
Buying into a sectional title scheme comes with its advantage. For instance, the cost of living in a sectional title scheme might be lower as the cost of maintaining the common property is shared by all the owners.
Sectional title units offer lucrative rental opportunities as they are often a popular type of property for tenants and are therefore typically easy to lease out.
In addition, the different units in the scheme are normally within close proximity to one another, creating a greater sense of communal life and allowing for greater interaction within communities. This also offers a greater sense of security which many property buyers are attracted to.
The Role of the Body Corporate
An owner of a unit in a sectional title scheme automatically becomes a member of that scheme's body corporate.
A body corporate is a legal entity made up of all owners in the sectional title scheme. It exists to represent owners and to manage and control the buildings or complex by making sure its financial, administrative and physical needs are taken care of.
The body corporate is also responsible for appointing trustees who are usually tasked with explaining the scheme's audited financial statements and giving feedback or reports on the work that the body corporate has been doing. Each trustee has a fiduciary duty towards the body corporate.
Like any other entity, the body corporate is subjected and regulated by a set of rules. These are Management Rules and they describe the powers and responsibilities of the trustees and deal with ways that the trustees manage the body corporate. The Management Rules are contained in Annexure 8 of the Sectional Titles Act. They are prescribed for all body corporates and they can only be changed by a unanimous decision by the body corporate.
No amended or new management rule may contradict any provision of the Act or be unreasonable, and all rules must apply equally to owners of sections put to the same use.
All owners are also subject to the Conduct Rules, which regulate the behavior of owners and tenants living in the scheme. The Conduct Rules ensure that the residents within the scheme do not use their units or the common area in a way that will negatively affect others in the scheme. The trustees as representatives of the body corporate have a duty to enforce the Conduct Rules.
These rules are contained in Annexure 9 of the Sectional Titles Act. They can be applied as provided for by the Act or members may vary them in a general meeting through a special resolution of at least 75% votes from all participating members of the body corporate. Conduct Rules may include but are not limited to the use of the common area or activities on the common property and the supervision of children or pets.