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DEPARTMENT OF RURAL DEVELOPMENT AND LAND REFORM

DEPARTMENT OF RURAL DEVELOPMENT AND LAND REFORM. SECTIONAL TITLES AMENDMENT BILL, 2010 Presentation to the Portfolio Committee on Rural Development and Land Reform 28 July 2010.

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DEPARTMENT OF RURAL DEVELOPMENT AND LAND REFORM

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  1. DEPARTMENT OF RURAL DEVELOPMENT AND LAND REFORM SECTIONAL TITLES AMENDMENT BILL, 2010 Presentation to the Portfolio Committee on Rural Development and Land Reform 28 July 2010

  2. The Sectional Titles Act, 1986 (Act No 95 of 1986) is the legislation that governs building developments where multiple owners hold a type of property ownership known as “sectional title units”. A sectional title scheme is made up of sections, such as apartments or flats, plus shared ownership of shared areas known as “common property”, such as lifts, driveways, parking areas, etc. The sections plus the undivided shares in the common property are known as “units”. 2 Background

  3. Clauses 1 (a), (b), and (c) of the Bill provide for the amendment of the definition of “developer”, “Minister”, and “owner”. Clause 1(a) provides for a developer’s agent or successor in title to act on behalf of a developer in respect of the approval of development schemes. Clause 1(b) provides for the amendment of the definition of “Minister”, which is necessary in view of the recently appointed members of Cabinet. 3 Clause 1

  4. Clause 1 contd. • Clause 1(c) of the Bill provides for the deletion of reference to the repealed Agricultural Credit Act,1966 (Act No 28 of 1966. • Clause 1(d) of the Bill proposes the amendment of section 1(3A) of the Act to provide for a body corporate to approach the Court in instances where it is unable to obtain a unanimous resolution. 4

  5. The phrase “the median line of the dividing floor, wall or ceiling”, in section 5(4) of the Act, stipulates the boundary of any section in a sectional title scheme. The amendment of section 5(5)(a), to provide that the median line of a section will pass through the centre of exterior windows, doors and other structures built into the section’s exterior walls, floors and ceilings, provides assistance in determinations of this nature. 5 Clause 2

  6. A sectional title register can be opened on more than one piece of land. If any such piece of land is hypothecated under a mortgage bond, then the provisions of section 40(5) of the Deeds Registries Act,1937 must be complied with. However the application of section 40(5) causes confusion especially regarding the format and content of its application. The amendment of section 11(3)(d), as proposed in clause 3(a), seeks to eliminate this confusion.6 Clause 3(a)

  7. Sections 11 and 12 of the Actprovide for the issuing of one certificate of real right of extension/exclusive use areas as reserved by a developer. This position creates problems where a real right of extension is subdivided. The amendment(s) proposed in clauses3(a), (b) and 4 of the Bill, addresses the issue. 7 Clauses 3(a), (b) and 4

  8. Section 14 of the Act makes provision for the cancellation of a registered sectional plan only by order of the Court.However, a registered plan may also be cancelled upon the destruction of, or damage to buildings, without the necessity of a Court Order. Clause 5 of the Bill makes it clear that a Court Order is not necessary for the cancellation of a sectional plan where the buildings are damaged or destroyed. 8 Clause 5

  9. Section 15B of the Act does not cater for the issuing of a certificate of registered sectional title in respect of a fraction of an undivided share in a unit (e.g a title deed for a 1/52 share in a unit) in a sectional titles scheme. Clause 6 of the Bill provides for the issuing of a certificate of registered sectional title in respect of a fraction of an undivided share in a unit. 9 Clause 6

  10. Section 24 of the Act requires the consent of every mortgagee if the extension of a section results in a deviation of more than 10 % in the participation quota of any section. Conveyancers are not in a position to determine a deviation and thus encounter difficulties in obtaining such consents. The amendment of section 24(6)(d), as proposed in Clause 7 of the Bill, seeks to address this problem. 10 Clause 7

  11. Section 25 of the Act does not provide for the extension of a scheme by the addition of rights to exclusive use only. Such an extension is only possible where the rights are linked to the extension of a scheme by the creation of new sections in such scheme. Clauses 8(a), (b), (d), (h), to (m), remedy this defect by making it clear that a scheme can be extended by the addition of exclusive use areas only. 11 Clause 8

  12. Section 25 of the Act does not have a mechanism to extend the period of time in which a right of extension must be exercised. Clause 8(b) of the Bill, caters for such an extension upon agreement between the developer and the body corporate. Clauses 8(b) and (c) provide for the reservation of a right of extension in respect of a building or buildings that already exist. 12 Clauses 8(b) and (c)

  13. It is necessary to reconcile the provisions of sections 25(4)(a) and 27(6) of the Act with the provisions of the National Credit Act, 2005, since the repeal of the Mutual Building Societies Act, 1965 (Act No. 24 of 1965), and the Building Societies Act, 1986 (Act No. 82 of 1986) Clauses 8(f) and 9(d) of the Bill seek to achieve this goal. 13 Clauses 8(f) and 9(d)

  14. The amendment of section 27 of the Act, as proposed in Clause 9(a) of the Bill, makes the registration of exclusive use areas on a sectional plan obligatory. The amendment of section 27(4) of the Act, as proposed in Clause 9(b),provides for the vesting of an exclusive use area in the body corporate free from any mortgage bond, a registered lease, usufruct, habitatio or usus. 14 Clause 9(a) and (b)

  15. Section 29(3) of the Act provides for the consent of every bondholder for purposes of the registration of a servitude over land in a sectional title scheme. New bonds are registered on a daily basis and it becomes virtually impossible to get the consent of every such bondholder. Clause 10 therefore provides for the obtaining of the consent of bondholders that exist on the date of execution of such servitude or agreement. 15 Clause 10

  16. Section 37 of the Act does not oblige a developer to pay attributable costs in respect of areas of common property subject to future development rights. The deletion of section 25(2)(e) and the amendment of section 37(1)(b), as proposed in clauses 8(e) and 11(a) of the Bill, addresses this problem. 16 Clauses 11(a) and 8(e)

  17. The addition of the proviso to section 37(2) of the Act, as proposed in Clause 11(b) gives clarity regarding the payment of contributions in cases where ownership of units has changed. Section 37 of the Act does not provide for the levying of special contributions and the amendment proposed in Clause 11(c) merely confirms and legalises a situation that has existed for a considerable number of years. 17 Clauses 11(b) and (c)

  18. Clause 12 of the Bill provides for the amendment of section 44 of the Act to include the regulation of the use of exclusive use areas for purposes shown on the registered sectional plan. Clause 13 of the Bill proposes the amendment of section 54(2) of the Act to provide for the change of name of the Association of Law Societies of the Republic of South Africa to the Law Society of South Africa. 18 Clauses 12 and 13

  19. Sections 60 and 60A of the Actcontain provisions in respect of savings and transitional provisions that have already lapsed. Clauses 14 and 15 of the Bill therefore provide for the removal of the lapsed provisions. 19 Clauses 14 and 15

  20. Clause 16 Clause 16 contains the short title of the Bill. THE END! 20

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