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Some good news for Body Corporates but Buyers and Sellers beware!! (22-Mar-2004)

Sectional Titles Amendment Act

The passing of the Sectional Titles Amendment Act, has as yet not had the opportunity to be fully digested by Conveyancers, Body Corporates and Managing Agents, says Jerry Margolius.

In September 2003, according to the summary on record, the Department of Land Affairs briefed the Land and Environmental Affairs Select Committee on the Sectional Title Amendment Bill. The main concern was that exclusive use areas could be rented to people outside a secured complex, thus jeopardizing the safety of those who had invested in the complex. It was also noted that the Regulations Board did not have any representatives from Body Corporates as members. The Sectional Titles Amendment Act 29 of 2003, was promulgated on 19th November 2003 (Government Gazette No. 1672) and made provisions for the registration to extensions of schemes and re-addressed exclusive use areas. The amended Act is available on the Internet. (http://www.gov.za/gazette/acts/2003/a29-03.pdf)

“Managing Agents are usually the first in the firing line and while certain amendments can be useful to the Body Corporates, buyers and sellers of sectional title schemes are unaware of their obligations until the Conveyancers ask for additional levies” says Margolius.

Body Corporates often have difficulty in obtaining a “unanimous resolution”. The current amendment allows the Body Corporate to approach the Court for relief. While the procedure may be expensive, the nature of the resolution may require the Body Corporate to address the resolution in an appropriate forum. Often Luxurious and non-luxurious improvements are the subject of a debate, which if necessary can be resolved with intervention by the Courts.

The future payment of levies and special levies will become a burden for sellers who will try and pass the costs onto buyers. Clause 9 of the Act amends section 37(2) and replaces "when such contribution became due" with "such resolution was passed". The liability for payment is linked to the time of the resolution. Therefore, as Body Corporates address this clause, they will be asking that all levies due for the remainder of the financial year be paid up front and not in monthly installments. While this amendment has caused much debate in the industry, the practical problems and legal interpretation are yet to be resolved. Some schemes may agree on the signing of tri-partite agreements, while others will use the opportunity to make use of advanced levy payments.

In terms of the amended Act, exclusive use areas now also received attention. Clause 8 (e) of the Act amended Section 27(1) to provide for the vesting of remaining exclusive use areas in the name of the body corporate and procedures to be followed. Procedures have now been introduced which provides for the vesting of exclusive use areas in the name of the body corporate where a member of the body corporate is no longer the owner of a section while exclusive use areas are still registered in his or her name.

Margolius concludes in stating that the impact of these amendments are likely to raise extensive debate in the legal fraternity as Body Corporates seek to address their rights.

Press Release: Jerry Margolius