What’s the deal with sectional title developments?
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A sectional title scheme involves the separate ownership by individuals of apartments or townhouses within the scheme. Ownership is for a section referred to as a unit within a complex or development. Sectional title schemes fall under the Sectional Title Act of 1986. The Act defines the rights and obligations of the various stakeholders who bring the scheme into effect.
When the ownership of a sectional title unit transfers to you as a homeowner, you automatically become a member of the body corporate, which consists of all the other owners within the complex or development. The body corporate holds an annual general meeting (AGM) to discuss budget matters, scheme rules, and elect trustees. Not every homeowner is a trustee, so you must use the AGM as an opportunity to voice your issues with the scheme. This is all very different from a full title or freehold ownership where an individual exclusively owns the building and the land and doesn't have to report to a body corporate or abide by the conduct rules of a scheme but may belong to a homeowners’ association.
Rights, obligations, and rules within a scheme
In the prescribed management rules, the rights and obligations of the homeowners are laid out. Body corporates rarely change these rules; however, it is essential for all owners, especially new ones, to become familiar with the rules, because they define the constraints you will have to live with as an owner. If any changes are made to these rules and obligations that may affect your finances, then it is crucial that, as a paying owner, you are not caught off guard.
For example, suppose the communal clubhouse is mistreated, vandalised, and over used by individuals visiting the complex. The board of trustees decides to increase the levy for maintenance and control purposes. In that case, that will affect your budget as an owner. Levies are calculated according to a budget prepared annually by the trustees. If there is a need to adjust the budget, the levies will be changed. The body corporate receives funds from all the owners using levies, which are used to pay for the expenses of the sectional title scheme. It is essential to be informed on this well in advance.
Exclusive-use and common-use areas
In sectional title schemes, the owner basically buys into the scheme by purchasing a unit; they outrightly own the unit's interior. In instances where the unit is attached to a garden, the owner will have exclusive use. While the owner of the specific unit may have exclusive use, they would still need to contact the body corporate if they wanted to make alterations in the garden. All the owners co-own all the common areas such as clubhouses, parking areas, children's play areas, etc., which are available for the enjoyment of all owners. Levies are therefore used to maintain the common property in the scheme.
Many people complain that levies are slightly higher in a sectional title scheme than in the case of full-title ownership where one would belong to a homeowners’ association. However, the advantages of sectional title ownership are that you have less upkeep and maintenance costs because the body corporate maintains the common property, including the exterior of your unit. You are therefore only responsible for the upkeep and maintenance of the interior of your unit.
Second, even though you have less freedom to alter the exterior of your unit or garden, the advantage is that the overall aesthetic of the complex is maintained, and the look and feel that appealed to the homeowner when they bought their property remains intact.
The body corporate may recover from the holder of the exclusive-use right the costs associated with the upkeep of these exclusive-use areas. So, stick to the rules, attend AGMs, read notices on changes, pay your levies and any other contributions, and if you do that, you'll live happily within your sectional title scheme.