DEPARTMENT OF LAND AFFAIRS Presentation to the Portfolio Committee on Agriculture & Land Affairs on the Sectional Titles Amendment Bill 2005 [B10 – 2005] by Sunday Ogunronbi & George Tsotsetsi April 12, 2005

Ad Clause 1 A.Current Position The definition of ”exclusive use area” contains reference to exclusive use areas contemplated in section 27 of the Act only. B.Problem Encountered The definition of ”exclusive use area” does not make reference to rights of exclusive use conferred in terms of section 27A or other parts of the Act. This causes interpretation problems in the application of the management and conduct rules. C.Proposed Amendment Clause 1 seeks to correct this ambiguity and introduce more certainty in the meaning of “Exclusive Use Area”.

Ad Clause 2 A.Current Position Section 24 of the Act provides for the extension of the boundaries or floor area of a section in a scheme by the owner of the section. The body corporate, by a special resolution of its members, must approve the extension and a draft sectional plan of the extension must be submitted to the Surveyor-General by a land surveyor or architect. If the deviation in the participation quota of a section is more than five per cent as a result of the extension, the mortgagee of each section in the scheme must consent to the registration of the sectional plan of extension of the section.

Ad Clause 2 (Cont’d) B.Problem Encountered Interpretation problems are experienced with section 24(6)(d) of the Act because it is not clear whether the percentage deviation relates to the participation quota of the individual section concerned, or to all the participation quotas of the sections in the scheme. Also, the low percentage referred to in this section also makes the process of an extension of a section time- consuming and expensive.

Ad Clause 2 (Cont’d) C.Proposed Amendment The proposed amendment is necessary to clarify the uncertainty pertaining to the participation quota and to save time and cost by increasing the deviation percentage to 10 percent.

Ad Clause 3 A.Current Position Section 25 provides for the extension of schemes by the addition of sections but does not place an obligation on a developer to register a new extension in a scheme. B.Problem Encountered Apartments in such extensions are usually let by a developer without the developer being obliged to contribute to the levy fund of the body corporate i.r.o the land as developed but contribute for undeveloped land.

Ad Clause 3 (cont’d) C.Proposed Amendment Clause 3 of the Bill seeks to oblige a developer to register such extensions in which case the developer will then also be liable for the payment of levies, for the land as developed.

Ad Clause 4 A.Current Position Section 27 of the Act provides for the registration of rights of exclusive use of parts of common property in the name of an owner of a scheme. B.Problem Encountered Section 27(6) of the Act does not sufficiently provide for the burdening of an exclusive use area with a real right. This situation creates practical problems in instances where exclusive use areas are bequeathed subject to a personal servitude such as usufruct, usus or habitatio. C.Proposed Amendment Clause 4 of the Bill seeks to extend the types of real rights in order to eliminate these problems.

Ad Clause 5 A.Current Position Section 36(7)(a) of the Act determines that a developer must convene a meeting of members of the body corporate not later than 60 days after the establishment of the body corporate. A developer who fails to comply with any of the provisions is guilty of an offence and liable on conviction to a fine not exceeding R1000. At the meeting the members must be furnished with a copy of the sectional plan, a certificate from the local authority that all rates due by the developer up to the date of the establishment of the body corporate have been paid and proof of revenue and expenditure concerning the management of the scheme until the date of establishment of the body corporate. The developer must pay any residue, as revealed in the proof, over to the body corporate. B.Problem Encountered A developer’s obligations in terms of the Act are often not being complied with and the penalty stipulated in section 36 appears not to be an effective deterrent.

Ad Clause 5 (Cont’d) C.Proposed Amendment Clause 5 proposes the inclusion of imprisonment for a period not exceeding two years in line with Section 1 of the Adjustment of Fines Act (Act No 101 0f 1991).

Ad Clause 6 A.Current Position Section 47 of the Act empowers a creditor of a body corporate to apply to court for the joinder of the members of the body corporate in their personal capacity and as joint judgment debtors in instances where a judgment against a body corporate remains unsatisfied. B.Problem Encountered An unfortunate position in sectional title schemes is that members of the body corporate (owners) are individually liable pro rata for any debt incurred by the body corporate. This, effectively, means that the failure of an owner to contribute to the levy fund becomes the liability of the body corporate and consequently, that judgment by a creditor can be obtained against the body corporate.

Ad Clause 6 (Cont’d) C.Proposed Amendment It is necessary to protect owners from losing their units in instances where a judgment debt against a body corporate remains unsatisfied and owners had paid their levies prior to the judgment given in favour of the judgment creditor.

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