An exclusive use area is not automatically transferred when a section is transferred to a new owner. An exclusive use area has to be registered in the Deeds Office by way of a separate notarial deed – a notarial deed of cession – in terms of which the exclusive use rights are ceded from the current owner to the new owner. An owner of a section with exclusive use rights to a particular part or parts of the common property will thus hold two title deeds, that is, a title deed or deed of transfer for the section, and a notarial deed for the exclusive use area.
In practice, it very often occurs that exclusive use areas, held by way of notarial deeds, are not ceded together with the transfer of a sectional unit to a new owner or purchaser. This is usually due to an estate agent or conveyancer’s failure to identify and deal with the exclusive use area accordingly. When an exclusive use is not ceded simultaneously with the transfer of a unit, certain legal consequences are set off.
It is important to note that an owner ceases to be a member of the body corporate once his or her unit has been transferred to a new owner. The effect of this is that the remaining exclusive use area that has not been ceded now vests in the body corporate. Additional expenses, which are very often not budgeted for, will have to be incurred to rectify the position. For the exclusive use area to be ceded from the body corporate, the procedure in terms of section 27(4)(c) of the Sectional Titles Act 95 of 1986 will have to be followed. The body corporate will have to apply, in the prescribed form, to the Registrar of Deeds for the issue of a certificate of registered real right of exclusive use area. Such a certificate serves as the body corporate’s “title deed” to the exclusive use area. This procedure requires the services of a conveyancer and, as a result, certain conveyancing fees and Deeds Office disbursements will have to be paid.
The body corporate is further not obliged to cede the exclusive use area back to the owner to whom it should have been ceded. This is particularly prejudicial towards a purchaser as it is common practice for a section and an exclusive use area to be sold in the same property sale agreement with the purchase price calculated to include the value of the exclusive use area. Failing to cede such an exclusive-use area will result in the purchaser not receiving what he or she paid for. This, in turn, can have a detrimental impact on the purchaser’s financing as the bank, or other financial institution, might have approved the purchaser’s loan based on the value of the section and the exclusive use area. In this event, the bank might insist that the failure be rectified if it finds that the section alone is not sufficient security for the loan.
When buying into a sectional title scheme and before signing an Offer to Purchase a section in a scheme, it is crucial to verify whether you are entitled to an exclusive use area to avoid the above legal implications. It is equally important to have experienced conveyancers on your team who can vet your sectional sale agreements by doing the necessary Deeds Office searches and inspecting the sectional plans of the scheme.
At PH Attorneys, our Property team specialises in sectional title matters, including the registration of exclusive use areas. Whether you’re buying, selling, or managing a sectional title unit, our experienced conveyancers can guide you through the complexities of sectional sale agreements, ensuring that your rights are fully protected, and any potential legal risks are avoided.
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