Entering into a Sectional Title Scheme | All You Need To Know

Sectional title ownership has continued to gain popularity in the South African property market in recent years. We’ve seen many buyers, both novice and experienced, jump onto the sectional title bandwagon because of its affordability, security and communal style living. And while sectional titles do have there benefits, many people buy into them without doing due diligence on the rules and agreements.

Below, we’ll take a look at the two most common mistakes made by buyers opting into a sectional title scheme, and how to avoid them. But first things first, let’s get through the basics.

What is a Sectional Title Scheme?

Sectional title describes the separate ownership of units or sections within a development or complex. When you buy into a sectional title development, you purchase a section or sections, as well as an undivided share of the common property, which are referred to as units.

So now that the basics are covered, let’s take a look at the most common mistakes to avoid when entering into a sectional title scheme.

The Purchase Agreement

So often we see buyers signing a purchase agreement without checking on the financial health of the scheme. Failing to do so can lead to disastrous results, especially for first time buyers.

With up to 30% of SA’s sectional title schemes being in arrears on levy payments, new purchases can often find themselves in a position where they are held liable for debts incurred before they bought into the scheme.

Our advice is to ask for a copy of the scheme’s latest financial statement before you sign a purchase agreement! It could save you a lot of money, time and stress down the line.

Exclusive Use Rules

Another mistake we’ve seen all to often, is when buyers fail to investigate the exclusive use rules of the scheme.

Defined by the Sectional Titles Act, exclusive use areas are a part or parts of the common property for the exclusive use by the owner or owners of one or more sections. Gardens, parking bays, storerooms and swimming pools could be subject to exclusive use rules.

Very often a buyer will buy into a scheme and take over an exclusive use area without actually having any legal title to it. This sort of mistake can lead to legal and financial disputes down the line.

Here, our advice would be to ensure that you understand the exclusive rules of use before buying a unit or section into a sectional title scheme. And if you feel that you may be misinterpreting the rules of use, talk to an attorney or trusted property agent about your concerns.

If you would like to know more about the ins and outs of sectional title schemes, feel free to contact us at info@gunstons.com with your queries.

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