Did you know there are proposed changes to the Sectional Titles Act?

Legal amendments to Sectional Title Act

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Category: Funding and Treasury, Legal and Advisory

Did you know there are proposed changes to the Sectional Titles Act?

Although these proposed changes relate to the sectional title industry, it is important to note that the Sectional Titles Amendment Bill, 2020 (“the Bill”) does not affect the body corporate lending environment at all, since none of the proposed amendments is targeted at any of the entrenched security provisions for lenders to bodies corporate.

In November 2020, the Minister for Agriculture, Land Reform and Rural Development (“the Department”) introduced amendments to the Sectional Titles Act (95 of 1968) to the National Assembly.  These amendments were proposed in the form of a Bill, as defined above.

To understand where these amendments fit within the sectional title industry, one needs to first have a look at the primary laws that apply to a sectional title scheme.

First, we have the Sectional Titles Act (95 of 1968) that regulates:

  • the approval and registration processes of a scheme;
  • the ownership, letting and selling of the common property;
  • subdivision, consolidation and extension of sections;
  • extension of schemes;
  • exclusive use of common property; and
  • participation quotas (PQ shares).

Then, it’s the Sectional Titles Schemes Management Act (8 of 2011) and its regulations, that regulate:

  • the functions and powers of the body corporate and its trustees;
  • the duties of sectional title property owners;
  • body corporate and trustee meetings;
  • body corporate rules;
  • body corporate insurance;
  • body corporate levies;
  • overall physical, financial and administrative management of a body corporate; and
  • the appointment of trustees, managing agents, executive managing agents and administrators.

Lastly, we have the Community Schemes Ombud Services (“CSOS”) Act (9 of 2011), its regulations and practice directives, that regulate and/or provide guidelines on:

  • the registration of your scheme and its Rules;
  • the CSOS levy;
  • the dispute resolution process available to your scheme; and
  • how to deal with complicated issues within your scheme (for example “how to apply the Covid-19 regulations in the sectional title environment”)

Now that you know where the Sectional Titles Act fits in, let’s have a look at some of the amendments that are proposed by the Department in the Bill. These amendments deal largely with:

  • technical aspects of the development of a scheme such as an architect’s or land surveyor’s compliance with the Spatial Planning and Land Use Management Act (16 of 2013);
  • certain definitions, like the definition of an Exclusive Use Area (EUA), were clarified;
  • the Department intends to allow for the amendment of sectional plans in respect of EUAs;
  • requiring developers to answer the questions put to them by the agents of lessees;
  • the manner of cancelling or amending sectional plans;
  • the leasing of portions of the common property and the rights of holders of real rights of extension in the scheme;
  • the approval of plans for a subdivision, the registration of subdivision of sections, and endorsements of title deeds, as well as the steps to be taken by stakeholders in the event that key sectional title documentation is lost or destroyed; and
  • provisions for the extension of a scheme.

What to expect next:

  • Calls for public comments opened again on 9 March 2021 and will close on 9 April 2021;
  • Public comments will then be addressed;
  • The Bill will be tabled in its final format or reamended depending on the outcome of the public consultation and commentary received;
  • The National Assembly will either pass or reject the Bill; and
  • The Bill will then go to the National Council of Provinces for approval or rejection before reaching the President’s desk for signature.

If you have any queries regarding the Sectional Titles Amendment Bill, 2020 and how it might affect your community scheme, make sure to contact us. Our Legal Advisory team are standing by to assist.