SECTIONAL TITLE INFORMATION

UNDERSTANDING SECTIONAL TITLE PROPERTY AND OWNERSHIP
  • UNDERSTANDING SECTIONAL TITLE
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Sectional Title, as a form of ownership (as per the Sectional Titles Act No.95 of 1986), emerged originally to permit parties to buy a piece or section of a larger property / building / development in a fashion where there ownership (or title) is protected (under Sectional Title law) and where there are clear rules and guidelines on how the overall property is managed, maintained and run.

What happens when you buy a section is that you not only own your own unit/section but you also become a “part owner” of the rest of the complexes or buildings common (shared) property.

This form of property ownership allows that the various other parts of the buildings and land which aren’t “sections” (or tied to a section in some way – see “exclusive use” below) are designated as “common property” which in essence is owned jointly by all of the parties who hold title on the individual “sections”.

Under Sectional title law, ownership is registered at the relevant Deeds Registry Office in South Africa. Every single unit is noted and recorded in the particular developments scheme. (A unit can be a section itself, or could be the likes of a garage, a store room or staff quarters as well)Sectional title “Plans” are created and registered at the SG’s (Surveyor-General) offices on each and every Sectional Title complex or development.

These Sectional Title Plans will normally show “Exclusive Use” areas as well which designated portions of the common property are allocated for “Exclusive Use” by specified unit or section owners.

Sectional title is a common type of property ownership method whereby “sections” of buildings or a development are created within a larger scheme to allow for each “section” of the building to be individually owned.

Who takes care of all the common property and the complex as a whole?

When it comes to administering and looking after the common property within a complex, this will fall to the Body Corporate which is a collective of the section owners within the Sectional title complex.

All property owners within a complex become members of the body corporate when they take transfer of a unit in the scheme.

The complex itself is really managed by the Trustees or Board of trustees who are elected by the members of the Body Corporate (all Body Corporate members can seek election as a Trustee) Most complexes will appoint a Managing Agent (independent companies who specialise in running sectional title blocks for body corporates) to help out with the daily issues and requirements of running a sectional title complex.


Who pays for the complexes upkeep?

As opposed to conventional full title property where you would pay rates and taxes, insurance, upkeep, electricity and water, in sectional title, many of these costs are funded from a levy fund which all owners pay into monthly.


What happens if there isn't enough money to cover maintenance?

In the event of there being unusual costs - which does happen, say for example when a townhouse complex needs repainting as a whole, a body corporate can raise additional needed funds via the mechanism of a "special levy".


What are voting rights?

As a member of the body corporate, your votes' "value" at meetings in a townhouse complex or sectional title scheme is predetermined by what size your unit is, so in essence the larger your unit is, the larger "value" your vote has or if your unit is smaller, the lower the vote value is.

Whilst Management rules do make provision for protecting minorities you do needed to understand and accept that you can be outvoted and that unlike traditional full title property where you are 100% in control you don't enjoy the same control in a townhouse complex or sectional title scheme.


What are management and conduct rules in townhouse complexes?

When you are looking at townhouses for sale or considering buying into a townhouse complex or sectional title scheme you need to review the particular complexes rules, both the management and conduct rules.

Sectional title and townhouse complexes are governed by both management and conduct rules which are set down in writing and aren't easily changed.

These rules make provision for issues like how the body corporate or townhouse complex can appoint trustees, when and how often annual general meetings are held, the likes of matters like voting rights as well as areas and factors around effective management in a scheme or townhouse complex.

In many sectional title complexes you will find that their rules have been tweaked and have "evolved" over time. These rules are in place to look after rights of the owners and to make sure that the complex is managed correctly - in the interests of all parties and residents.

You should take the time to go through both the management rules as well as the conduct rules in a complex as very relevant issues like what the complexes provisions are around pets may be particularly relevant to your own situation when you are considering flats, apartments or townhouses for sale.


What are conduct rules?

Conduct rules in townhouse complexes or sectional title schemes tend to be aimed at governing the day to day business of the owners and tenants residing together within a complex where all have their own "private space" but where the close distances between residents' dictates that they should adhere to certain reasonable behaviors.


How do they figure out the levies each unit pays?

What each owner actually pays is determined by the extent of their unit when taken as a part of the whole - referred to as a participation quota or PQ. The levy is worked out by taking the annualized costs of the complex, working it back to a monthly figure and then calculating between the number of units and the participation quota what each owner pays in levies.


Financial soundness of the scheme or apartment/townhouse complex

For those looking at townhouses for sale or considering buying into any sectional title scheme, they need to make sure that the schemes financial position is solid. These days banks looking to grant mortgages in complexes scrutinize these as well and they will only grant bonds in schemes and complexes which are solvent and the financials are in sound order.

Prospective purchasers of a townhouse sectional title complex are quite within their rights to ask to see the complexes latest financial statements to check that the complex is able to meet its financial obligations, surplus available and planning for maintenance matters. If you are considering making an offer on a flat, apartment or townhouse for sale, ask your estate agent if they can assist you by making a set of the financials available for perusing.


Are sectional title properties all made up of residential housing?

Sectional title schemes appear most commonly in traditional residential homes in the form of flats, townhouses and apartments but have also become popular in office complexes, buildings, multi-unit warehouses and small factory units.


What is the difference between the UK Innovator Visa and the Start-up visa

UK INNOVATOR VISA AND START-UP VISA



The UK government closed the Tier 1 UK Entrepreneur Visa in March 2019 and replaced it with the UK Innovator Visa and Start-Up Visa. These visas are designed for genuine entrepreneurs who are willing and able to build innovative businesses that are endorsed by a registered endorsing body in the UK. This is a key distinction from the previous entrepreneur visa. The applicant must now have a genuine and original business plan. It must meet new or existing market needs creating a competitive advantage. Applicants must have the necessary skills, knowledge, experience and market awareness to successfully run the business and there must be evidence of structured planning. This will include the potential for job creation and growth into national and international markets.



START-UP CATEGORY



The Startup category is designed for high potential, early-stage entrepreneurs.

    -    No funds are required

    -    Applicants can reside in the UK with their families for two years

    -    During this period applicants will work solely on developing their business

    -    After two years applicants can switch to the Innovator category



INNOVATOR CATEGORY The UK Innovator category is designed for more experienced business people.

    -    Minimum investment of £50,000

    -    Applicants can reside in the UK with their families for three years

    -    During this period applicants will work solely on developing their business

    -    After three years, applicants can apply to extend their stay for a further 3 years or to settle permanently in the UK

 


How does an investor need to apply for the Citzenship by Investment Program in the Seychelles?

An investor is eligible to apply for citizenship by investment, by fulfilling all of the following requirements:


  • Invest US$1 million or more in a business in Seychelles.

  • Live in Seychelles for 11 years as a legal resident.

  • Not be absent from Seychelles for an uninterrupted period of one year or more without the consent of the Minister of the Interior.

  • Not be sentenced to imprisonment for more than 1 year under any Seychelles law.

  • Achieve a minimum of 80% in one of the three national languages (Creole, English, or French) in the citizenship qualification exam.

  • Don't be a banned immigrant.

The investor must pass an exam in which (s)he will have to answer 25 out of 100 questions in one of three national languages (Creole, English, or French). The exam has a passing score of 80% and is administered by the Department of Immigration and Civil Status every two months.


What are the benefits of the Seychelles Citzenship by Investment Program?

Benefits of the Seychelles Citizenship by Investment Program:


  • The most powerful African passport with visa-free travel to 151 countries (Russia, China, Great Britain, EU Schengen countries, etc.)

  • Access to free health care and other benefits

  • Exemption from payment of penalties and obtaining a permit for paid work


What are the fiscal advantages of starting a business in Mauritius


  • Corporate Tax: 15%

  • Income Tax (personal tax): 15%

  • Value-Added Tax (VAT): 15%

  • Corporate Social Responsibility (CSR tax): 2% on book profits

  • Land Transfer Tax: 5%

  • No Capital Gains Tax

  • No Inheritance Tax on Property

  • No Withholding Tax on Interest and Dividends

  • Exemption from Customs Duty on Equipment

  • Free Repatriation of Profits, Dividends & Capital


Tell me more about the Mauritius Residence Program

Mauritius' residence program allows foreign nationals to make a real estate investment into the country and apply for a residence permit. Investors and their families are granted full residency including the right to live, work and retire in Mauritius.

Known for its sublime tropical climate and spectacular living environments, Mauritius also boasts a dynamic economy, attractive tax regimes, and competitive business landscape.

For investors wishing to reside on the island, the Mauritius Residence-by-Investment Program is the most efficient way to obtain such status. Individuals who invest in the nation's real estate market can become Mauritian residents within two to six months.

Global investors are eligible for a Residence Permit upon the purchase of a qualifying residential property under the Property Development Scheme (PDS) when they invest a minimum of USD 375,000 or the equivalent.

Residency will apply to the whole family including spouse or common-law partner, unmarried financially dependent children of any age, and parents of the permit holder for as long as the property is owned by the investor.


Chas Everitt and STBB Sectional Title Guide (English)
Chas Everitt and STBB Sectional Title Guide (Afrikaans)