Common and Exclusive Use Property in Sectional Title

Common and Exclusive Use Property in Sectional Title

Common Property in a sectional title scheme is the land included in the scheme, buildings that are not included in a section and land bought by the relevant body corporate subsequent to the establishment of the sectional title scheme.

Common Property is owned by all the unit holders in a sectional title scheme in their respective participation quota.

EXCLUSIVE USE AREAS 

Exclusive Use Area is part or parts of Common Property for the use by the owner or owners of one or more sections.
It is not sufficient that access to the area is limited (e.g. balconies) to one or a few owners for the area to be an Exclusive Use Area.

Currently there are two methods to create an Exclusive Use Area. One is to register the Exclusive Use Area, the other is a rule-created Exclusive Use Area.

Registered Exclusive Use Areas
These Exclusive Use Areas are created in terms of S27 of the Sectional Titles Act, and a registered real right over common property. This must be authorized by a unanimous resolution of the body corporate and registered.

Upon registration the beneficiary of the Exclusive Use Area should receive a Certificate of Real Right.
These Exclusive Use Areas are considered as a real right and therefore may be mortgaged.

Rule-created Exclusive Use Areas
The body corporate may create an Exclusive Use Area in terms of Section 27A. This is a cheaper and less cumbersome method of creating an Exclusive Use Area as it involves amending the rules of the body corporate. As legislation does not specify the rules, which should be amended to include the Exclusive Use Area, it may be the management rules or the conduct rules. To amend the management rules a unanimous resolution is required, whilst amending the conduct rules requires a special resolution.

These amendments must be notified to the Registrar of Deeds for the rule to become enforceable. The rule must include a layout plan to scale, which indicates the Exclusive Use Areas and their purpose.

Note that this allows an Exclusive Use Area to be created by passing a special resolution (by amending the conduct rules). However due to the importance of exclusive use areas, and the potential for conflict between owners, the legislator should have stated clearly that rule-created exclusive use areas can only be established by way of management rules and therefore require a unanimous resolution.

Differences

Section 27 Section 27A
Requires a surveyed diagram Requires an indication on a layout diagram
Delineated on the sectional plan Included in the rules of the scheme
Is a real right (i.e. can be mortgaged
and enforced against everyone)
Is a personal right (i.e. cannot be mortgaged and only enforced against other owners in the same scheme

Participation Quota

The Participation Quota (PQ) is based on the size of section in relation to the combined sizes of all the sections in a scheme. These are calculated to four decimal places and are registered with the sectional plan at the Registrar of Deeds.

PQ has nothing to do with ground area used, roof area used etc. It is based on the floor area of each section.

If a complex consists of residential and non-residential units the developer may nominate the PQ for the non-residential units. This nomination also has to be registered with the Registrar of Deeds. Thereafter the value of the PQ is calculated in relation to floor area for each section.

The owners of the section are joint owners of the common property based on their PQ.

Levies, special levies and the value of votes are calculated in accordance with the PQ for the relevant section.

IMPROVEMENTS

The prescribed management rules categorise improvements in a complex to the common property into “luxurious” and “non-luxurious”. However, the rules provide no guidance as to what would constitute a luxurious or non-luxurious improvement.

The nature of the improvement must be analysed to determine whether the improvement will be luxurious or non-luxurious.

An improvement that is necessary to ensure that the structural integrity of the complex is maintained would probably not be considered as a luxurious improvement. For example, adding an apron (a layer of concrete around the building) to strengthen the foundations of a complex if the ground is shifting.

The erection of a carport to a complex where each complex has a double garage would probably be considered as a luxurious improvement, however this would be different if the sections did not include a double garage, and the complex is situated in a hail storm climate.

The addition of a swimming pool, squash courts etc to any complex except a complex situated in the most upper-class areas would be considered as a luxurious improvement.

The installation of a basic security system would probably be considered as a non-luxurious, but a more sophisticated, automated system may be considered as a luxurious improvement.

As is evident from the examples above, there are many factors which determine the nature of an improvement.

Procedures
Luxurious improvements

A unanimous resolution is required to affect an improvement of a luxurious nature to the common property.

It is possible to obtain this in two manners:

  1. To convene a special general meeting (or use the Annual General Meeting). 30 days’ notice must be given for this meeting and the notice must include the details of the unanimous resolution to be passed. 80% of all the owners must be present or represented at the meeting. All the owners who are present or represented at the meeting must either vote in favour or abstain from voting at this meeting.
  2. To obtain the written consent of all the owners of the complex to affect the improvements.

Non-luxurious improvements

The trustees must give written notice to all the owners in the complex of the intended improvements. This notice must also include the costs, the manner of financing and the need and desirability of the improvements.

The trustees must then wait for 30 days before commencing any of the intended improvements. If no owner objects in writing, to the trustees, then the trustees may commence with the improvements.

If an owner objects in writing to the intended improvements within the 30 days, then the trustees must call for a special general where a special resolution will be passed. Therefore, the trustees must give 30 days’ notice of the meeting and include the details of the special resolution. The special resolution at the meeting will be to accept, amend or veto the intended improvements. As the prescribed rules specifically request a special general meeting, it is not possible to obtain this special resolution on paper without convening a special general meeting. i.e. a special general meeting must be held.

 

More Articles About Sectional Title

The Difference Between Freehold Property and Sectional Title
Sectional Title Units

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