DEPARTMENT OF LAND AFFAIRS

1. 1 DEPARTMENT OF LAND AFFAIRS Presentation to the Portfolio Committee on Agriculture and Land Affairs on the Sectional Titles Amendment Bill 2006 [B…….. – 2006] by the Chief Registrar of Deeds: Sam Lefafa Date: 24 May 2006

2. The Sectional Titles Act is the legislation governing apartments, flats, townhouses, office blocks, shopping centers and other building developments where multiple owners hold a type of property ownership known as a “sectional title”. BACKGROUND

3. A sectional title scheme is made up of individual ownership of a defined section, such as an apartment or flat, plus shared ownership with other owners of shared areas known as “common property”, such as lobbies, lifts, driveways, parking areas, etc. The sections plus the undivided shares in the common property are known as “units”. BACKGROUND(Cont’d)

4. A “body corporate” is a collective of all the owners of a sectional title development. The body corporate manages and makes decisions about the building development and in particular the common property. BACKGROUND (Cont’d)

5. The sectional title form of ownership is complex. Changes to the way it is applied, or to the type of use it applies to, can give rise to issues requiring review including proposals for legislative amendments. BACKGROUND (Cont’d)

6. Section 54 of the Sectional Titles Act established a Sectional Titles Regulation Board (STRB) comprising Government officials and certain external stakeholders to advise and recommend to the Minister measures to improve the workings of the Act including amendment to legislation and regulations. Sectional Titles Regulation Board (STRB)

7. Issues usually considered by the STRB are, broadly speaking, the technical and legal aspects of creating and dealing with sectional title units, and the rights and responsibilities of owners of units and the body corporate. Sectional Titles Regulation Board (STRB)

8. CURRENT POSITION: The definition of a “sectional mortgage bond” provides for a registered lease to serve as security under a sectional mortgage bond. PROBLEMS ENCOUNTERED: This may be interpreted as providing for a short-term lease to serve as security under a sectional mortgage bond. A short term lease is not deemed to be immovable property and can not serve as security under a sectional mortgage bond. PROPOSED AMENDMENT: The proposed amendment to the definition provides that a sectional mortgage bond may only be registered over long term leases. CLAUSE 1

9. CURRENT POSITION: The definition of a “sectional mortgage bond” does not provide for the registration of a mortgage bond over exclusive use areas, which areas are part of the common property and for the exclusive use of the owner of the relevant section in the scheme, i.e. balconies, gardens, garages, etc. PROBLEMS ENCOUNTERED This causes practical difficulties due to the connection between exclusive use areas and the relevant sections in a sectional title scheme. PROPOSED AMENDMENT: The proposed amendment provides for mortgage bonds to be registered over exclusive use areas. CLAUSE 1

10. CURRENT POSITION: The definition of “Surveyor-General” contains reference to the Land Survey Act No. 9 of 1927 which Act was repealed and replaced by the Land Survey Act No. 8 of 1997. PROPOSED AMENDMENT: The proposed amendment of the definition of “Surveyor-General” is a necessary and consequential amendment. CLAUSE 1

11. CURRENT POSITION: SECTION 15B(5): Section 15B(5) provides for the registration of a certificate of registered sectional title in respect of a joint owner’s share in a unit (in other words, the issuing of a separate title deed to an owner for his/her share in a unit). Section 15B(3) does not provide for the registration of a sectional title deed in respect of a joint owner’s share in an exclusive use area or a real right reserved under section 25(1) of the Act. CLAUSE 2

12. CLAUSE 2 • PROBLEMS ENCOUNTERED: • The joint holder of an exclusive use area or real right reserved under section 25(1) of the Act, is not in a position to obtain a separate title deed for his/her undivided share. • For a joint owner to deal with his/her share in an exclusive use area or real right reserved under section 25(1) of the Act, it is necessary that a separate title deed be issued.

13. CLAUSE 2 PROPOSED AMENDMENT: Clause 2 of the Bill proposes the provision of the registration of a certificate of real right in respect of a share in an exclusive use area or a right reserved under section 25(1) of the Act.

14. CURRENT POSITION: SECTION 26 Section 26 empowers a body corporate to purchase land to extend the common property. CLAUSE 3

15. CLAUSE 3 PROBLEMS ENCOUNTERED The Act does not provide for the acquisition of land in any other manner, for example, by donation, exchange or bequest.

16. CLAUSE 3 PROPOSED AMENDMENT: Clause 3 of the Bill seeks to empower the body corporate to acquire land by other means.

17. CURRENT POSITION: The proviso to section 36(2) refers to a lease of a unit contemplated by paragraph (b) of thedefinition of “owner”. The definition of “owner” has since been amended by the deletion of the reference to a lease of a unit but, unfortunately, the proviso to section 36(2) has not been amended accordingly. CLAUSE 4

18. CLAUSE 4 • PROPOSED AMENDMENT: • The proposed deletion of the proviso to section 36(2) of the Act is a necessary and consequential amendment.

19. GENERAL AMENDMENT: Various sections of the Act make reference to the Land Survey Act, 1927 (Act 9 of 1927), which was repealed by the Land Survey Act, 1997 (Act 8 of 1997). The Act, therefore, needs to be amended by the substitution for the expression “Land Survey Act, 1927”, of the expression “Land Survey Act, 1997”, wherever it appears in the Act to reflect the correct statutory situation. Clause 5 of the Bill provides therefore. CLAUSE 5

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