A buyer enquires from an estate agent: “I have fallen in love with a gorgeous three-bedroom sea-view apartment in Camps Bay that is part of a share block company,and wish to purchase it. What is the process?”
The agent, never having heard of a share block company, is baffled and turns to her attorney to explain the process.
The Share Blocks Control Act 59 of 1980 applies. The set up very briefly is as follows:
Investors register a share block company.
The investors purchase a block of flats assisted by a bond from a financial institution.
Purchasing shares in the company entitle a purchaser to make use of a portion of the block and to vote at meetings of shareholders.
The shares held only entitle one to a usage right and not to a right of ownership.
A monthly levy is paid by each shareholder to cover the costs of maintenance and administration of the block.
Should any shareholder wish to sell the right of use of his apartment, and hence his shares in the company, he may do so.
The sale is effected by way of a Sale of Shares Agreement being signed and the usage rights in respect of the apartment being ceded by the seller to the buyer. The Articles of Association of the company would also have to be looked at to see if any other requirements exist or if any restrictions apply.
Transfer would not occur at the Deeds Office as it ordinarily would with transfer of a property. It would be effected by way of the transfer of shares from the seller to the purchaser. Transfer duty will still be payable.
Alan Levy Attorneys specialises in evictions, rent recoupment and landlord / tenant law. The views in this article are not intended to be, and should not be, construed as legal advice. If legal advice is required, a suitably-qualified attorney should be consulted with.