Top tips for sectional title first-time buyers

Private Property South Africa

Whether you’re a first-time property buyer, property investor, or downsizing after the youngsters have moved out, there are important questions you need to ask before you bind yourself to the community scheme way of living, advises Zerlinda van der Merwe, specialist community schemes consultant and general manager of Pam Golding Property Management Services.

Van der Merwe says that with sectional title residential property increasingly sought after, there are a number of obvious, as well as less obvious questions you need to ask, including those you will wish you had asked when issues arise later on.

3 P’s of sectional title

“If you are intending to keep a pet, need extra parking, want to rent to tenants on a short-term basis, wonder if you can run your business from home, or are concerned about what would happen if you or your tenant contravenes the rules, these questions will be answered by the rules of the body corporate.

Read more: Parking in a sectional title

“Request a copy of the conduct and management rules of the body corporate, which regulates all aspects of communal living, including the three P’s of sectional title, namely “Pets, Parking and People”.

“Firstly, ensure that the rules you are given are the correct version of the rules and have been properly approved by the members and either registered at the deeds office or reviewed and approved by the Community Schemes Ombud Service (CSOS).”

Financial status of body corporate

Van der Merwe says the next step is to establish the financial status of the body corporate in the complex you are buying into. “Finding out that the body corporate has a healthy bank balance is a positive sign of good management. However, this may not always be the case, and you will need to take a look at the audited and trustee approved financial statements of the body corporate, as well as the member approved administrative and reserve fund budgets.

“You need to ask the question as to whether a special levy has recently been raised or if this in progress, as you will be liable for contributing to same from the date of registration of transfer of your unit in the scheme. Find out the reason for the special levy, the amount raised and the duration that it will be recovered from members.

“Take a look at whether many owners owe the body corporate outstanding levies, and whether legal action has been taken by the body corporate to recover these debts. As a potential member of the scheme, you are entitled to this information, so make sure that you are asking the right questions and receive the relevant answers.

5 steps to understanding the sectional plans

“Although it may at first glance seem to be quite complicated, understanding the sectional plans of the scheme is relatively simple,” says van der Merwe. “These plans will offer a ‘bird’s eye view’ of the development, indicating those areas that are sections, registered exclusive use areas, and common property.

“Take note of your parking bays, garages, courtyards, storerooms, balconies, patios, terraces, and gardens, as the sectional plans will confirm the legal nature of these areas, as well as your responsibility and liability in each instance.

“Reference will be made to your participation quota, which will determine your undivided share in the common property within the scheme, your proportionate share in the expenses of the body corporate, and the extent of your voting right in body corporate matters.”

Asks van der Merwe: “Does the sectional plan include any extension that was carried out to your section? If not, the bank, should you require it, will not grant loan financing.

“Don’t be surprised if the developer suddenly starts building within your scheme long after it has been established. Developers sometimes have this right, provided they have reserved it from the start, which can also be confirmed by the sectional plans.

“While you’re taking a look at the plans, also find out if there are any title deed restrictions, which could limit your ownership or prevent you from exercising this right fully, such as a limitation on selling your garage separately from your residential unit.”

What about maintenance?

Furthermore, points out van der Merwe, “it’s important to establish if there any areas within the scheme that require maintenance or repair, or any items that require replacement. For example, in regard to: painting, electric fencing, security cameras, elevators, swimming pool or window frames. Each body corporate must have a written maintenance, repair and replacement plan, known as a ’10-year maintenance plan’, which is updated by the trustees and approved by the members annually.

“This plan will set out which areas or items of common property exist, and when they require either maintenance or repair, or need to be replaced. The reserve fund budget, as already mentioned, will need to be prepared in terms of this plan, and that is often drawn up by a professional in the industry. It’s important to understand your role to play in the maintenance and repair required within the scheme.

“As an owner, you are responsible for the maintenance and repair of your section up to the median line, which is an invisible mid-point separating your section from your neighbour’s section or the common property. You will also be responsible to keep your exclusive use area clean and neat, and will contribute financially to its maintenance and repair by the body corporate, along with your proportionate share in the maintenance, repair and upkeep of the common property.”

Managed or self-administered?

Adds van der Merwe: “It’s also important to find out whether the scheme is self-administered, which means it is run by the trustees and perhaps a support staff, or whether there is a professional managing agent administering and managing the scheme on behalf of, and alongside, the trustees.

“Take a look at the minutes of the last annual general meeting to see whether the members raised any concerns with the management of the body corporate, or the minutes of a trustee meeting which may indicate how well the trustees work together, and for the body corporate.

“While there may be a negative perception among some of the CSOS, managing agents and bodies corporate have to abide by the Act and its regulations, so find out whether there are currently disputes in progress involving the body corporate, whether your scheme is registered with the CSOS, and whether it is recovering and paying the prescribed levies.

“While you need to be aware of the above, do not let this deter you from buying into a suitable sectional title scheme which meets your requirements, as the sense of community and secure living is worth the investment.

“There may be particular areas of interest for you when deciding whether to invest in a sectional title scheme, so when in doubt and needing some guidance, contact us for assistance in undertaking this very important step of due diligence.”

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