Advice for first-time buyers in sectional title schemes

Sectional title schemes provide viable property investment opportunities. What does it mean to buy a sectional title home?

Many prospective buyers are unaware of the differences between owning a freehold home and a sectional title property.

With a freehold property, you are the sole owner and have complete freedom to carry out alterations, within the by-laws of the municipality in which the property is located. When you buy a sectional title property, you will become the owner of a specific unit in a complex consisting of several units. You will also be part owner of any communal areas in the complex and will be bound by the rules and regulations governing the complex.

First-time buyers need to understand exactly what sectional title ownership entails before signing an offer to purchase. This includes the rules and regulations governing, the management of sectional title schemes and those governing the behaviour of residents, as well as the responsibilities of unit owners. These include attending body corporate meetings and voting on important issues.

Management rules

The Regulations to the Sectional Titles Schemes Management Act (STSMA) contain a prescribed set of management and conduct rules.

The management rules prescribe the way sectional title scheme administrative duties are carried out. 

This section deals with:

  • How to run body corporate and trustee meetings, including quorum requirements.
  • Voting, electing, and appointing trustees.
  • Duties of trustees.
  • Budgets, financial planning, and management.
  • The use of sections.

Conduct rules

Conduct rules govern the behaviour of residents.

Issues covered include:

  • Use of common and exclusive use areas.
  • Vehicle parking.
  • Refuse removals.
  • Pet ownership.

Changing the rules

Conduct rules and some of the management rules are allowed to be changed if the owners in a scheme decide they need to make amendments.

For management rules to be changed, a unanimous resolution of all members of the body corporate is required. Conduct rules, on the other hand, require a special resolution.

Once the body corporate members have approved the changes, the trustees can apply to the Community Schemes Ombud Service (CSOS) for them to be amended. The CSOS will evaluate whether the amendments are just and applicable, and will then approve them or make recommendations for changes.

Ongoing costs

Ongoing shared costs include levies, a monthly contribution towards the running and maintenance of the complex or building, and municipal rates and taxes. There are also incidental shared costs that contribute towards funds needed for irregular maintenance, including refurbishments and security installations or repairs.

Although you will own your sectional title unit in the scheme, you need to be aware that all common property areas are shared by unit owners. You will be partially responsible for the maintenance and repairs to these sections. Usually, these costs are covered by the monthly levy, but there may be periodic special levies when extraordinary repairs need to be carried out. You need to take this into account when deciding whether or not to buy into a sectional title scheme.

Questions to ask before buying

Understand the financials. You need to examine and fully understand the financial status of the sectional title scheme. If the financials are not in good standing, you could find yourself responsible for existing debt. You have every right to access such information from the body corporate or managing agent. The minutes of the last annual general meeting (AGM) should put you in a position to assess the scheme’s history and financial position.

What insurance does the body corporate insurance cover? Owners contribute to this insurance through monthly levies. Units are usually insured against damage due to fire, lightning, and explosions, as well as damage to permanent fittings like geysers and walls.

Conduct rules. Make sure that the rules governing the behaviour of residents in the complex don’t clash with your lifestyle. For example, if you are a pet lover, be sure that you are permitted to keep pets on your property.

The above highlighted points are in a nutshell what you need to pay attention to as you consider sectional title schemes.

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