Formation of a body corporate

A sectional title body corporate is automatically formed when the developer of a complex transfers ownership of the first unit from the developer to the owner. This does not require any intervention of the developer or the owner, as such it cannot be stopped, or postponed.

At this stage the body corporate will consist of the developer and the new owner. Although the developer is probably the majority in this case, it does ensure that the developer cannot pass a unanimous resolution on his or her own, without the consent of the new owner. As ownership of more units are transferred from the developer to other owners, the developer has less control over the complex.

As every owner is a member of the body corporate, the developer is a member of the body corporate until he or she transfers ownership of the last unit to another owner. At this point ownership of all exclusive use areas (not sections) that may be in the developer’s name, is passed to the body corporate free of charge.

The first meeting of owners of the newly formed body corporate must be held within 60 days of forming the body corporate. Notice of 7 days must be given to all owners of the complex for this meeting.

At this meeting the developer must provide all the unit owners with:

  • a copy of the sectional plan;
  • a certificate from the local authority, stating that all rates are fully paid until the point of forming the body corporate;
  • proof of revenue and expenditure of the management of the complex from the date the first unit is occupied, until the body corporate is formed.

The developer must pay any surplus of funds from managing the complex to the body corporate.

If the developer does not comply with the above, he or she will be liable for a fine of R 1 000 or less.

Section 36
The agenda must include the following:

  • The consideration, confirmation or variation of the insurances effected by the developer or the body corporate;
  • The consideration, confirmation or variation of an itemised estimate of the anticipated income and expenses of the body corporate for the ensuing financial year;
  • the consideration and approval, with or without amendment, of the financial statements relating to the management, control and administration