Sectional Title Amendment Bill: adoption

Meeting report

LAND AND ENVIRONMENTAL AFFAIRS SELECT COMMITTEE
07 JUNE 2005
SECTIONAL TITLES AMENDMENT BILL: BRIEFING AND ADOPTION

Chairperson: Reverend P Moatshe (ANC)

Documents handed out:
Department PowerPoint presentation on the Bill
Sectional Title Amendment Bill [B10B-2005]

SUMMARY
The Department of Land Affairs briefed the Committee on the purpose of the amendments to the Sectional Title Act. The Department had proposed six amendments relating to Sections 27, 24, 25, 36 and 47. The changes aimed to remove ambiguity in the interpretation of certain current sections, and reduce the time and costs of implementing the Act. The need to regulate developers and protect sectional titleholders was suggested as a further reason for the amendments. The Committee accepted the proposed Department amendments and unanimously adopted the Bill.

MINUTES

Department briefing
Mr Ogunronbi (Department Director: Land Planning and Property Law) briefed the Committee on the purpose of the amendments to the Act. Sectional Title related to individual ownership of defined units with a share in common property, for example lobbies and lift areas. The collective of owners would be termed the ‘Body Corporate’.

Mr Ogunronbi presented the proposed amendment clauses. Amendment Clause 1 related to the problems of interpretation of Section 27 of the Act. Currently there was ambiguity over whether ‘exclusive use areas’ referenced in section 27 referred only to that section, or could apply to rules of management and conduct. The amendment clause sought to introduce clarity to the meaning of ‘Exclusive Use Area’.

Proposed Amendment Clause 2 related to Section 24 of the Act, which applied to rules regarding extension of boundaries or floor areas by the owner of that section. Currently the Body Corporate had to provide consent for extensions, with only a 5% deviation allowed. To provide such consent required members of the Body Corporate to contact their mortgagee for approval, and the plan had to be registered with the Surveyor-General. The problems encountered with this procedure related to the cost and delay in gaining such consent and to the ambiguity of the section. It was unclear whether the reference to quotas regarded a specific section or to all sections in the scheme. The proposed amendment increases the deviation percentage allowed to 10%, and would save time and money and provide the necessary clarity for interpretation.

Clause 3 related to Section 25, which omitted an obligation on developers to register extension schemes. This had resulted in the failure of developers to contribute to the levy fund of the Body Corporate. The amendment sought to oblige developers to register all extensions.

Clause 4 sought to amend Section 27 of the Act which related to rights for exclusive use of parts of common property which had been registered in the name of the owner of a scheme. The section failed to fully provide for all aspects of the rights, and problems had arisen specifically in instances where such areas had been bequeathed subject to a personal servitude. The amendment sought to extend the types of real rights recognised in order to eliminate such problems.

The amendment to Clause 5 related to section 36 (7) (a) of the Act. Currently developers had to convene a meeting with members of the Body Corporate within 60 days of establishing that body. The members needed to be provided with copies of the plan and certificates from the Local Authority of fees paid. Any residue should be returned to the Body Corporate members. Failure to hold such meetings was punishable with a R1 000 fine, an ‘insignificant deterrent’ for developers. The amendment included a punitive element of unlimited fines and a maximum prison sentence of two years for developers who failed to comply.

Finally, Amendment Clause 6 had been introduced as a means to protect members of the Body Corporate from the creditors of other members who had defaulted on debts. Under Section 47, a creditor of the Body Corporate could apply in court for permission to seek payment from the members in their individual capacity. This was unfair on those who had already paid, as they could be made to pay twice, sometimes losing their residential units as a result. The proposed amendment would ensure this could not happen.

Discussion
Mr C Van Rooyen (ANC, Free State) requested clarity on how increasing the deviation provision to 10% in amendment clause 2 would result in real savings to time and costs, given that it was a small increase.

Mr Ogunronbi highlighted that the current costs incurred in gaining 95% consent were enormous. Thus the savings gained by the 5% increase would indeed be significant.

Mr Van Rooyen asked how compliance by the developer under the amended clause 5, would be monitored. Would it be the role of the Body Corporate?

Mr Lefafa (Department Chief Registrar of Deeds) explained that non-compliance by a developer would now be a criminal matter and the police would investigate complaints.

Mr Van Rooyen requested information regarding the appointment of Mr G Paddock as consultant to the Department, and the purposes and stages of his project.

Mr Ogunronbi confirmed that G Paddock and Associates had been commissioned as Project Managers to investigate specific aspects of the Act. Their suggestions would probably result in two Bills. One related to establishing a Sectional Title Ombudsman to settle complaints. The project had advanced to a considerable degree and proposals were now to be submitted to the Minister for approval in principle.

Mr Van Rooyen noted that under the Property Rates Act, the Municipalities would invoice individual sectional title holders directly and not through the Body Corporate. What would be the effect of this?

Mr Ogunronbi clarified that implementation of the Property Rates Act was the responsibility of municipalities. and was out of the Department’s control.

Mr Lefafa added that the Act contained a transitional provision. Before rates could be levied, evaluation of all properties first had to take place - an enormous task, given the number if separate units in the country.

Mr F Adams (ANC) asked how it would be possible for creditors to take action against individuals when the Body Corporate was a group? How could the amendments segregate and protect individuals who had paid?

Mr Ogunronbi explained that in practice, it should be straightforward to demonstrate which individuals had paid, through the Body Corporate records. Currently members were liable for a pro rata share in the debt, but this equated to ‘double jeopardy’ for some that might then pay twice.

Mr F Adams referred to the current penalty of R1 000 for developers who failed to comply with the Act. He expressed concern at the minimal level of the current fine, and whether the non-specification of a fine under the amendment might lead to further low fines being imposed. How would the punitive element be governed?

Mr Ogunronbi highlighted that magistrates, in line with the Adjustment of Fines Act 1991, would impose the fines. The magistrates will have authority to impose the fines on a sliding scale, depending on the seriousness of the case, with imprisonment for the most serious cases.

Mr F Adams expressed concern about the practice of some owners who leased garages, independently of the main flats, for use as dwellings. Would it be possible to prevent this?

Mr Ogunronbi explained that the Department could not interfere in private commercial interests. The rules and management of the Body Corporate should tackle such instances.

The Chairperson proposed the Motion of Desirability. The Bill was unanimously adopted without amendments.

The meeting was adjourned.