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What you should know before buying a property in a sectional title
02 March 2020
 

For safety reasons, it has become more and more popular to buy property in sectional title units and thus have people closer to you when the need should arise.  This is usually also a smaller property to maintain and may be cheaper than trying to maintain a huge free standing property.

 

However, it is not always fun and games and you might end up with more on your plate than you would want to handle.

 

For clarity it is important to note the following components of a sectional title scheme:

1. Units or sections, which are individually owned and registered in the name of the owner.

2. Common property, which is owned by all the owners in undivided shares and may include gardens, driveways and carports.

3. Exclusive use areas, which are portions of the common property that a specific owner has an exclusive right to use, but which is not owned by that owner.

It is important to remember that once you become the owner in a sectional title owner, you are a member of the body corporate, who is responsible to manage the complex. These members will appoint trustees who will tend to the day to day matters of the Body Corp and will report back to the members at the AGM.  If you are not a trustee, you have the right to question the decisions o the trustees and discuss your concerns with them.

At the AGM the members of the body corporate approve a budget for the upcoming financial year. The trustees then raise a levy which is payable by every owner on a monthly basis. In this way, every owner contributes to the expenses of the body corporate.

There are different types of levies.  Example:

  • Ordinary levies - calculated in accordance with the approved budget - and
  • Special levies, which are raised to cover expenditure that has not been approved in the budget (for example, if a lift breaks down and must be fixed urgently.

New owners become liable for the pro rata payment of both ordinary and special levies from the date of registration of transfer. Purchasers should thus enquire at the onset of the transaction whether any special levies will be due and payable.

 

Each complex will have a set of management rules, which may include some of the following items

  • Pets in the complex - the scheme might not allow animals
  • Refuse disposal - some complexes have specific disposal procedures
  • Vehicles and parking areas are often contentious issues. There are usually allocated spaces, and owners and visitors cannot park in areas that are not for their use.
  • Alterations to units - this is not allowed unless permission to do so has been granted by the trustees. No changes may be made to common property and if the alterations to a unit affect the common property, they cannot be carried out.

    Common tips for sectional title owners:

  • Find out as much as you can about the property and the people managing or administering it before you sign any offer to purchase.
  • If applying for a bond to buy the sectional title, then your bank will also want to know about the financial viability of the scheme.
  • Get a copy of the management and conduct rules of the sectional title scheme you’re interested in and ensure that you understand what you can and cannot do within that property. For example, many schemes prohibit pets.
  • Most are prescriptive about the outside appearance of the buildings and will not allow you to use a different type of brick or fencing from everyone else.
  • The amount of the monthly levies and what they cover.
  • Whether the current insured value of your property is sufficient and whether the body corporate carries fidelity insurance that covers the misappropriation of funds.
  • Whether the section you’re buying has been structurally altered and, if so, were the alterations done in accordance with the scheme’s constitution and conduct rules.

 

 

Compiled from Property 24

 
 
 
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