Sectional title living has grown in popularity over the last decade for reasons which include heightened security and a more communal way of living. Sectional titles tend to be more affordable which makes it easier for young people to own their own property. However buying into a sectional scheme has its advantages and disadvantages.
What is a sectional title?
The concept ‘sectional title’ describes the separate ownership of units or sections within a complex or development. When you buy into a sectional title complex, you purchase a section or sections together with an undivided share of the common property, which are known as units. A sectional title unit may refer to anything from a mini subtype house, a semi-detached house, a townhouse, a flat or apartment to a duet house.
Ownership of sectional title property involves a number of elements, bearing in mind that the unit consists of a section plus an undivided share in the common property.
The first element is the section, which is exclusively owned by the owner thereof. The second element is the common property, which is owned by all the owners in undivided shares, meaning that you become a joint owner of the common property of the sectional title scheme. The third possible element is the right to exclusively use certain parts of the common property for example a garage, a garden or a storeroom. Even though the owner does not own the exclusive use area, he is the only person that has the right of use thereof.
Advantages of sectional title ownership
Living in a sectional title has its advantages. An owner of a unit in a sectional title scheme automatically becomes a member of the scheme’s body corporate. The body corporate is the legal entity that owns and controls the common property in the sectional title scheme. The body corporate is responsible for laying down the rules that have to be adhered to by all the owners.
The body corporate receives funds from all the owners by means of levies, which are used to pay for the expenses of the sectional title scheme. Unlike freehold properties, where the owners have to pay for their own home insurance and for the upkeep of the pavement, garden and exterior of their homes, owners of sectional title units pay a monthly levy instead. The levy usually includes the insurance premiums, maintenance of the common property, wages and salaries of cleaners, security and other staff involved in maintaining the common property, as well as any water and electricity required for the common property. Owners of sectional schemes usually only need to pay for their rates and taxes, insurance for the contents of their home, their own private gardens and for their monthly electricity and water consumption. The specifics may differ slightly from complex to complex.
As the different units are within close proximity to one another, as compared to freehold properties, sectional titles have a greater sense of communal life. This allows for greater interaction which means that close knit communities can be and usually are formed. It is also perceived to be more secure. Sectional title developments generally have good perimeter and entrance security, which is usually included in the monthly levies.
Buying into a sectional title scheme may be more affordable than buying into freehold property. The cost of living in a sectional title is often lower because the cost of maintaining the common property is shared by all the owners. Sectional title units are also very popular in the rental market and are usually leased out easily.
Disadvantages of sectional title ownership
Living in a sectional title complex can also have its disadvantages. Unlike full-title ownership, where the owner is in complete control and is financially responsible for the property in its entirety, a person who invests in a sectional title scheme will own part of the scheme, meaning that the owner has invested in and is part of a small community. As a result, they will need to comply with the management rules and conduct rules as determined by the body corporate. The body corporate may adopt rules relating to the keeping of pets, play areas and access to communal areas.
The rules and regulations of any particular complex may change, and even though all sectional title investors or owners may not necessarily agree with the changes, they would not have the power to change them individually.
Owners of sectional title units also do not have the freedom to alter, renovate or expand their sections without the approval of the body corporate. In addition, all the owners are jointly and separately liable for the debt of the body corporate, which means that if an owner does not pay his/her share, it may become the other owners’ problem as well.
As sectional title ownership has many advantages but also disadvantages and a person should carefully weigh these up when considering whether to invest in a sectional title scheme. It is advisable to not only consider the legal implications of sectional title ownership, but to also investigate whether the sectional title scheme is financially sound and well managed prior to investing and establish beforehand what the rules of the body corporate are. If necessary, the advice of your attorney may assist in ensuring that you are fully aware of your legal rights under the sectional title.