Sectional Titles Amendment Bill: public hearings & DALRDD response to public comments; with Deputy Minister

Meeting report

Opening remarks

The Chairperson congratulated Ms Zoleka Capa on behalf of the Committee on her appointment as Deputy Minister (DM) of the Department, and wished her well.

As the country had been emerging from the third wave of the pandemic, a series of events, largely motivated by the imprisonment of former President Jacob Zuma, had led to a period of unrest. All sectors in the country were disrupted by the unrest, with small-scale farmers struggling to obtain feed for their livestock and to supply their produce to the market. Both the Economic Recovery Plan and the Disaster Management Recovery Plan were currently being implemented by government.

The violence and vigilantism seen in Phoenix highlighted that the country had not overcome its poor race relations. He pleaded that the citizens in the country should seek to work with one another towards building an equal and united society, as envisaged in 1994. 

The Committee would receive briefings from the Department of Agriculture, Land Reform and Rural Development (DALRRD), the South African Law Reform Commission (SALRC) and the Law Society of South Africa (LSSA).

Ms Capa expressed her appreciation of the Committee’s welcome, and indicated that she was committed to ensuring that there was equitable access and provision of land to South Africans. 

SALRC's submissions on the Sectional Titles Amendment Bill (STAB)

Ms Anneline Turpin, SALRC Attorney, briefed the Committee on the Centre's submissions on the STAB. She said the submission had been made on behalf of the Poor Flat Dwellers Movement, which works primarily to secure the right to housing and tenure of poor, elderly and marginalised communities.

In its submission, the SALRC indicated that in its current form, the STAB required reform. It outlined several reasons for this, of which only some would be referred to.

• Firstly, it advocated for education on the obligations of indigent sectional title owners, as well as the responsibilities of body corporate members.
• Secondly, that developers tasked with housing delivery, the Department of Human Settlements (DHS) and the relevant municipalities, identify budgets for meaningful information transfer for informed decisions in order to ensure that beneficiaries' tenure was not later threatened.
• Thirdly, there needed to be inclusionary housing safeguards such as state subsidies for maintenance in the Sectional Title Act, to support tenure in order to realise the substantive right of access to housing.

Discussion

Ms T Mbabama (DA) said that the presentation was a copy paste of the current legislation, and did not focus on the inclusion of vulnerable peoples. She suggested that those who were amending the bills should consider adding vulnerable groups to the bill. 

There were a lot of hidden costs to acquiring a sectional title, which led to the eviction of people. She agreed with the SALRC’s view that there needed to be improved education on the subsidies and hidden costs.

Mr N Masipa (DA) asked who the LRC thought should be responsible for bearing the costs of educating citizens on pro-poor housing. 

Inkosi R Cebekhulu (IFP) mentioned that the Committee hoped that the final version of the Bill included clauses which protected the exploited. 

The Chairperson asked whether all the issues raised by the SALRC, including the establishment of a body corporate, could be addressed in the STAB, or if should they be addressed in the Sectional Title Schemes Management Act (STSMA). If they were to be addressed in the STAB, could the SALRC provide the proposals of the clauses that would require the Committee’s attention, and the text to that effect?

SALRC's response

Ms Sharita Samuel, Regional Director of the SALRC in Durban, responded that the cost of initiating awareness campaigns would fall on the state. 

There had to be a financial impact study conducted prior to the passing of a Bill, particularly if the purpose of the legislation was to comply with the Constitution and to advance equitable access to housing, as well as security of tenure. Several organisations, domestically and regionally, intentionally advocate for this as well. Corruption, and the poor construction of homes in housing projects, had prevented applicants from securing a dwelling.

Housing legislation and policy needed to cohere in a manner that gives substance and effect to the objective of the government. The SALRC recommended that over the next five to ten years, thought should be given to ensure that all legislation be applied in a consistent manner to give effect to the benefit of the majority of South Africans.

There were two important invisible costs contained in this legislation which made it difficult to secure tenure. These were the outsourcing of scheme management functions -- which the state seemed to support -- and the appointment of administrators to (allegedly) dysfunctional schemes. The SALRC was looking to confirm whether those costs were being monitored and if they served the interests of the owners or lessors that were affected by the appointments. After analysing the data, the SALRC had been led to believe that it was not being monitored, so syndicate organisations were able to purchase houses on discounted benefit schemes, and then evict the indigent occupants.

Ms Turpin responded to the Chairperson’s question, and said that Section 21 (1A) of the STAB did refer to the establishment of a body corporate. 

Law Society of South Africa briefing on the STAB

Mr Hussan Goga, Chairperson: Property Law Committee of the LSSA, said the Society rejected the proposal that the Sectional Titles Regulations Board (STRB) be increased from seven to nine members. The reason provided for the objection was related to the budgetary constraints of the state. It submitted that the Board should comprise of the Chief Registrar of Deeds, the Chief Surveyor-General, two practicing conveyancers (nominated by the LSSA), a professional land surveyor, a Registrar of Deeds, a Deputy Registrar of Deeds, an Assistant Registrar of Deeds and a representative from the DALRRD. In addition, it submitted that both the Banking Council and the architect be removed from the Board.

The LSSA rejected the proposed amendment of Section 60 (3), as it believed that the owner had a right to take transfer of the exclusive use area by the registration of a notarial deed. It went on to state that the right accrued to an owner was established in the law, so it would be unlawful to circumvent such a right by imposing an additional obligation that never existed. The Department agreed with the LSSA’s submission on the proposed Amendment of Section 60 (3).

Discussion

Ms M Tlhape (ANC) said that education through awareness campaigns would be very important, particularly for the vulnerable. 

Ms A Steyn (DA) said that citizens should be made aware of the STSMA and STAB. The Committee should also consider how to ensure that citizens were made aware of the bills.

Mr Masipa asked why the LSSA was against architects forming part of the Regulations Board, as they could play a big role. 

The Chairperson asked what the Department thought of the proposal provided by the LSSA.

LSSA's response

Mr Goga said that the banking council and the architects were not members of the Regulations Board. The banking council had a very limited interest in this legislation (STAB), as it dealt primarily with matters relating to registration. They had been invited to make inputs on what effect the legislation had on mortgages. Referring to the architects, he said that the sectional plans were done mainly by the land surveyors and as a result, the architects did not play much of a role.

Education was critical for the good functioning of any body corporate. Most of the bodies corporate in Phoenix and Chatsworth were dysfunctional because members had not been provided with the necessary information. For instance, the rules require that an audit of the financials of the body corporate must be done, which was not fair, as many of the individuals involved in the body were indigent. The LSSA did not believe that the STAB was the adequate forum for this, as it dealt largely with registry matters. To address conduct and management related issues which were not covered in the STAB, Parliament had passed the STSMA. Greater emphasis on the education of this Act was important.

Another issue identified by the LSSA was the 100 transfers that could not be registered in eThekwini on low cost sectional titles, because the managing agents demand a high price for a levy certificate. Neither the transferees nor the municipalities had the funds to afford the levy certificate. There needed to be expeditious transfers, accompanied by clean and effective management of the bodies corporate, to deal with all the current problems faced.

The Chairperson appreciated the input from the LSSA. He requested that the Committee turn to the responses of the Department.

Ms Steyn suggested that when the Committee deliberates on the Deeds Amendment Bill, it should consider the recommendations made by both the LSSA and the SALRC.

The Chairperson noted the suggestion.

Mr Ramasodi Mooketsa, Acting Director- General, DALRRD, thanked the officials from the LSSA and SALRC for their input.

DALRRD briefing on submissions made on the STAB

Ms Antoinette Reynolds, Deputy Registrar of Deeds, DALRRD, briefed the Committee on the submissions made on the STAB in 2020.

Response to the LSSA’s comment on the Sectional Titles Regulations Board

The Department agreed that the number of board members should remain at seven. However, it disagreed that both the banking council and the architect be removed from the Board, as it deemed both to be necessary.

Response to the LSSA on the proposed Amendment of Section 60 (Savings and Transitional Provisions)

The Department agreed with the LSSA’s submission on the proposed Amendment of Section 60 (3). It explained that the reason for the proposed amendment was based on the principle that exclusive use areas must be created on sectional plans.

Response to the comment by the Western Cape Government on the amendment of Section 4

The Western Cape Government recommended that the roles and functions of the body corporate be outlined and clarified to the lessees before its registration, or as early as possible. This would ensure the effective management of their development and that it functioned optimally. This recommendation was rejected by the Department, which indicated that such matters should be addressed in the STSMA, as it dealt with management and consumer related issues in sectional title schemes.

The Chairperson thanked the Department for the presentation.

Ms Tlhape was pleased with the response on the exclusive area use, as she believed that it covered the interests of the vulnerable.

Referring to the public comments, she said that most of the citizens did not know about the STSMA, so more emphasis should be placed on creating awareness and education. It would have been beneficial for the Committee to have also deliberated on the STSMA. 

Ms Steyn agreed that it was unfortunate that the Committee did not have time to deal with the STSMA. She suggested that the Committee communicate with the Committee on Human Settlements on ways to educate the public on the Act. She thanked the Department for the clarification provided in its presentation.

Ms N Mahlo (ANC) recommended that an awareness campaign should be instituted, to ensure that all citizens were aware of both bills.

Ms Mbabama said that the presentation had provided clarity on all the issues.

Mr N Capa (ANC) agreed that more should be done to create awareness of these bills to the citizens.

Mr Masipa requested that the Department explain what the financial impact of the STSM would be.

The Chairperson thanked the Department for the in-depth presentation on the sectional title deeds. The Committee would look into all the issues mentioned by the Department, and see what else could be done.

Referring to the STSMA, he asked whether the Department had conducted the legislation and if so, whether it could indicate the progress on the socio-economic impact assessments (SEIAS)?

Mr Mooketsa said that the SEIAS had been concluded by the Department.

Ms Reynolds said that the DHS had been assisted by the DALRRD, and had appointed a consultant to draft both the STSMA and the Community Schemes Ombud Service Act (CSOSA). The DHS was responsible for concluding the SEAIS. A schedule was included in the STSMA which provided for the amendment of the Sectional Titles Act (STA). The STA included provisions that contained the duties and responsibilities of the owners in sectional schemes, the duties and responsibilities of bodies corporate, and the establishment of a body corporate. When the amendment of the STA came into effect in 2016, all the consumer and managerial issues were removed.

The regulations of the STSMA address statutory managerial matters and statutory conduct rules that are applicable to sectional title. Therefore, if a developer for instance opened a sectional scheme and did not want to utilise the managerial and consumer related matters as provided by the regulations, they could apply to the CSOS to have those statutory requirements replaced by other rules. Only the Office of the Chief Ombud was permitted to approve and amend schemes and sectional titles.

Both the CSOSA and the STSMA were administered by the DHS. The Sectional Title Managerial Board had been established in the DHS, as per Section 18 of the STSMA. Members of the STSMA board were responsible for considering proposed amendments to the Acts. She suggested that the SALRC make a submission to that board for amendments to the STSMA, as the DALRRD did not do SEIAS.

The Chairperson thanked the Department for their responses to the questions asked by Members. The Committee was pleased with the input provided by all officials, and felt that it had assisted with their understanding.

Adoption of minutes

The Committee then moved to consider and adopt the minutes of its meeting on 1 June 2021.

Ms Mahlo moved the adoption of the minutes, and Mr Masipa seconded.

The minutes were adopted.

The meeting was adjourned.