There are two options open to developers and owners for creating exclusive use rights for particular areas of common property. Exclusive use areas (EUAs) are areas other than your sectional unit that are additional “nice to haves”, such as stores, garages, parking bays, gardens, etc. EUAs can be registered in the rules made by the developer upon opening the scheme’s register, or later by the body corporate or by registration of a notarial deed. The second method is regarded by attorneys and financial institutions as the “belt & braces” method. Basically, the rule is that if the EUA is of substantial value, like a basement garage for instance, then the banks can use that as additional collateral for the mortgage bond.
Very often it is left up to the land surveyor to advise the developer on whether garages, balconies and stores are measured in as part of the apartment sections or not. This decision is of particular importance as levies are generally raised on the measured floor area of a section and exclusive use areas are not included in this calculation. For instance, the value of a section in Clifton or Camps Bay may hinge on a magnificent balcony with outstanding views, but how the land surveyor measured up the section will dictate its “municipal valuation” and the extent of the individual owner’s liability to pay levies.
So, the land surveyor’s role is crucial in terms of how sectional title properties will be valued by municipalities. I believe that not enough time is spent by land surveyors, developers and attorneys in getting this “product mix” right at the inception of schemes, and it is left to bodies corporate and managing agents to try and rectify issues that arise afterwards.
Another area of caution for all concerned is registered real rights of extension in terms of section 25 of the Sectional Titles Act, 1986. If you have bought into a phased scheme, you should take extreme care to find out exactly what the end result will look like. It is exceptionally difficult for developers to predict what the demand for specific units will be in 5 or 10 years’ time. In a phased development, if a developer wishes to change the product mix, he must then revert to the body corporate for a unanimous resolution – and that is material enough for another article!
The Deeds Offices have tightened up tremendously in this regard and, if an amending plan does not agree pretty much exactly with the final development plan that was originally filed in the Deeds Office, then the developer runs the risk of his next phase not being registered on time and the Deeds Office calling for a unanimous resolution from the body corporate instead. This might place the developer in a situation where he faces financial ruin due to the potential delays in getting registration, caused by the vacillations of the body corporate. So, the final message to buyers is – beware, and to developers – plan extremely carefully for the future phases because you can’t afford to get it wrong.
Biff Lewis of Biff Lewis Geomatics Inc. is an authority in the field of sectional title surveying with over 30 years of experience in the field. Biff is one of the three presenters on the University of Cape Town Sectional Title Development Course. Click here for more information on this course.
Article reference: Volume 5, Issue 4, Page 1