By Prof Graham Paddock
11. Does a unit owner have the same rights as an ordinary house owner?
No. Sectional title ownership involves communal living. To regulate the shared living environment in a sectional title scheme there are provisions in the law and the scheme’s ‘rules’ that place restrictions on your lifestyle. Other differences are:
- You have to pay a share of scheme expenses and are responsible for a share of scheme debts – if you fail to make these payments you will face legal debt recovery proceedings.
- In using your section and the common property you have to take into account the rights of other owners and occupiers of sections – i.e. you have to use your property reasonably and must not interfere with the rights of others to use their property.
- You have to repair and maintain your sections and keep your exclusive use areas neat and tidy. The body corporate has to maintain all the common property.
12. What is the body corporate of a sectional titles scheme?
A scheme’s ‘body corporate’ is an association of all the unit owners. It represents owners, administers the scheme and manages the common property.
13. Who controls the body corporate?
All owners of units are members of the body corporate. They elect trustees to conduct day-to-day business. Often the trustees employ a managing agent to assist them. The trustees must manage the scheme in accordance with any instruction given or restriction imposed by owners at a general meeting.
14. Who approves the scheme’s annual budget?
The owners of units in the scheme approve the budget at the body corporate’s annual general meeting.The trustees propose a budget for the next financial year and the owners approve this, with or without changes – so the owners make the final decision on the scheme budget.
15. What are levies?
The ‘levy’ is the contribution, usually paid in monthly instalments, that each section owner pays to the body corporate to meet the scheme’s common expenses. An owner entitled to exclusive use rights must also pay any costs attributable to the upkeep and repair of that area. Liability for levies arises when the trustees take a decision ‘levying’ the contributions on owners.
16. What should I check when buying sectional title property?
- The sectional plan, to determine your section boundaries, the scheme boundaries and to make sure that any section you are buying has not been informally “extended”.
- Who owns or has exclusive use rights to parking, garden, storage areas, etc. Make sure that you are obtaining rights to any area you expect to be able to use exclusively, such as a parking bay or garden area.
- The participation quota of the section(s). This will usually determine the amount of the levies you pay and the value of your vote.
- The scheme rules – read these and look particularly for any rules that change your liability for levies or create exclusive use rights.
- The current monthly levies and what expenses are included in the operating budget.
- The condition of all the scheme’s common property, to assess the need for repairs and maintenance which could require further levies.
- The most recent set of financial statements – look particularly to see if there are reserves for maintenance and unexpected expenses.
- Whether the body corporate owes money, is involved in litigation or has judgments against it. You could be ‘buying into’ scheme debt.
- The amount and type of insurances.
17. How do I pay rates on my sectional property?
The municipality bills each owner for rates based on the market value of that unit. The body corporate usually pays the municipality for water, electricity and refuse removal services. Any amounts the body corporate has to pay the municipality it recovers from owners as part of the levies.
18. Can I let or sell my sectional property as I wish?
Generally, you can. But you must check the rules of the scheme to make sure that there is no restriction on letting or selling.
It is not unusual for scheme rules to restrict short-term or ‘holiday’ letting, and some ‘retirement’ schemes require that on the sale of a unit a share of the profit is paid to the body corporate to subsidise levies. You will not be able to transfer your property to a buyer until you have paid all amounts due to the body corporate.
19. What does the body corporate insurance cover?
The body corporate must insure the building(s) and common facilities to their full replacement value. It also insures any movable items owned by the body corporate. The body corporate may also take out other types of insurance. Owners should insure their own furniture, fittings and personal effects.
20. Must the scheme have reserves for future expenses?
In practice, no. The owners in a scheme are obliged to include in their approved budget what they consider to be a reasonable provision for future maintenance and repairs, but in practice many schemes do not build up reserve funds. When buying into a scheme you need to assess the likely cost of maintenance and repairs and see what, if any, money has been set aside for these purposes.
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