Deeds Registries Amendment Bill [B13-2010] and Sectional Titles Amendment Bill [B14-2010]: public hearings & deliberations

Meeting report

The Committee Secretary announced that the Chairperson, Mr S Sizani (ANC) had been taken ill.  She called on Members to elect an acting Chairperson.  Ms H Matlanyane (ANC) was elected as Acting Chairperson.  Apologies had been received from the Minister and the Director-General of the Department of Rural Development and Land Reform (DRDLR).

Presentation by Department of Rural Development and Land Reform on the Deeds Registries Amendment Bill
Ms Antoinette Reynolds, Chief Officer: Deeds, DRDLR, said that the Deeds Registries Act of 1937 was the legislation that governed the registration of deeds.  South African law did not explicitly guarantee title to land and the deeds registration system effectively guaranteed land title.  The Deeds Registries Regulations Board (DRRB) had been established to offer recommendations and advice to the Minister.

Ms Reynolds went through the Deeds Registries Amendment Bill (DRAB).  Clauses 1(a), (b) and 2(b) amended Sections 2 and 3(1)(z) of the principal Act.  Currently, registrars of deeds were not obliged to follow the directives of the Chief Registrar.  This could lead to confusion amongst deeds examiners and conveyancers.  The amendment would oblige registrars to follow the prescribed procedure and would ensure uniformity throughout the country.

Clause 2(a) of the DRAB amended Section 3(1)(u) of the Act.  This clause made reference to the registration of mining titles.  The Mineral and Petroleum Resources Development Act had made provision for the discontinuation of the registration of mineral rights in a deeds register.  The amendment was necessary to reflect the correct position.  The reference to “the Supreme Court” was changed to “the High Court”.

Clause 3 of the Bill amended Section 9 of the Act.  At present there was no provision for the Minister to appoint alternate members to the DRRB.  Members were often unable to attend meetings due to various reasons.  This could result in there being no of quorum and meetings might have to be cancelled or postponed.  The proposed amendment would enable the appointment of alternate members.

Clause 4 of the Bill amended Section 17(2) of the Act.  At present a deed had to contain the full names and marital status of the person involved.  This did not apply to other related documents such as consents or applications, which could lead to fraud.  The amendment would require the full names and marital status of persons to be included in all deeds and other documents.

Clause 5 of the Bill amended Section 34 of the Act.  This Section made provision for the owner of a piece of land to apply for a certificate of registered title for his or her undivided share of the land where the land was subject to joint ownership.  There was no provision for obtaining a title deed for a fraction of the part-owner's share.  The amendment would provide for the issue of a certificate of registered title of any fraction of his or her undivided share.

Clause 6 of the Bill amended Section 102 of the Act.  The definition of the Master of the Supreme Court would be amended to the Master of the High Court and the title of the Minister would be changed to read the Minister of Rural Development and Land Reform. 

Clause 7 contained the short title of the Bill.

Discussion
The Chairperson said that there were pending questions regarding the Sectional Titles Amendment Bill (STAB).

Ms A Steyn (DA) said that Section 34 of the Act allowed the sole owner to obtain a certificate.  She requested a more detailed explanation for the proposed amendment.

Mr George Tsotetsi, Acting Registrar of Deeds, DRDLR explained that two or more persons could own property that was registered jointly in their names.  Either owner could get separate title.  The law currently wanted to see one person as the owner.  By recognising fractional ownership, a co-owner could have the benefit of a fractional mortgage on his or her fraction of the property.

Mr S Letafa, Chief Registrar of Deeds, DRDLR said that exorbitant property prices were leading people to join forces in buying property.  Clashes between the owners might lead to the disintegration of the relationship.  The amendment would allow for more flexibility in such arrangements.  People would not be locked into agreements.

Ms Steyn asked if the provision would apply to cases where land had been sub-divided.

Mr M Swathe (DA) asked how the fractional title would work in cases where there was not a 50/50 split between the co-owners.

Mr Tsotetsi said that Section 34 would not apply to cases where the land had been sub-divided.  Owners would have a specified percentage share in the land.  The registration of a fractional title would be in proportion to the co-owner's percentage of interest.

Ms Steyn remarked that farms had been the subject of share equity schemes in many cases.  The land was held by trusts, closed corporations and other similar vehicles.  She asked if individuals would have a share of the land that was occupied and if the provision would help the occupants to obtain ownership of their own land.

Mr Letafa confirmed that would be the case and was the reason for the introduction of the DRAB.

Submission from by the Law Society of South Africa (LSSA)
Ms Bongiwe Lufundo, Principal State Law Advisor, made a brief presentation on behalf of the Law Society of South Africa.  The LSSA had only commented on Clause 4 of the Bill.  The suggestion was made that the additional words “or record” be omitted and the word “and” be inserted between “execution” and “registration”.  If the changes to the provisions were not made, requests for rates clearance and other ancillary documents could be rejected on the basis of non-compliance.  Sequestration notes and other documents might be affected as well.  The requirements should only apply to documents that were executed or registered by the Registrar.

Discussion
Mr Tsotetsi said that the LSSA was missing one important point - the Bill was aimed at deeds and not the accompanying documents.  Sequestration notices should contain the identity number of the person concerned.

Ms Steyn regretted that representatives from the LSSA were not present.  She asked what the problem with compliance was.

Mr Swathe felt the LSSA wanted to do away with records.  He asked what the reason was for the proposal and what the consequences would be.

The Chairperson pointed out that Ms Lufundo was not from LSSA and would be unable to respond on the behalf of the LSSA.

Ms Lufundo did not know what the intention of the LSSA was for the suggestion.  The documents should contain the full name and marital status of the owner, as well as the name of his or her spouse if married in community of property.

Mr Tsotetsi said that the non-compliance issue related to the disclosure of the identity number and marital status of the persons concerned.  Rates clearance documents were issued by the relevant municipality.  The relevance was to the property rather than the ownership.  Statistics were kept for record purposes.

Deliberations on the Deeds Registries Amendment Bill
The Committee Secretary read the Long Title and Clause 1 of the Bill.

The Chairperson said that Members had had the Bill for some time.  She asked if it was necessary for the Committee to go through the full process.

The Committee Secretary said the process could be curtailed if the Members of the Committee were satisfied.

Mr S Ntapane (UDM) felt that Members should be aware of those provisions that required further discussion.

Mr Swathe suggested that the full procedure be followed.

Mr E Nchabeleng (ANC) concurred with Mr Ntapane.

The Chairperson said that the process was put in place to ensure that Members understood the Bill before them.  She felt that Members had a good understanding of the proposed legislation.

Mr Swathe confirmed that he had understood what had been said about the Bill.

The Chairperson suggested that Members commented on a page-by-page basis.

Mr Nchabeleng asked that the Committee proceeded on a clause-by-clause basis.

The Chairperson agreed to follow the full procedure.

Clause 2 was agreed by the Committee, without amendments.

Ms Steyn asked for further clarity on the provisions in Clause 3(a).  She asked how the alternate members would be appointed.  She asked if the positions would be advertised.

Ms Reynolds replied that written nominations would be requested for submission to the LSSA.  Nominations would be referred to the Director-General of the Department for further consideration.  The names of suitable candidates and their curriculum vitae would then be forwarded to the Minister, who would make the appointments.

Clauses 3 ,4, 5 and 6 and the Short Title were agreed, without amendment.

The Motion of Desirability was read to the Committee.  Ms Steyn proposed that the Motion of Desirability was adopted.  Mr Nchabeleng seconded the motion.

The Committee Secretary read the Committee's Report on the Bill.  Ms Steyn proposed that the report was adopted.  Ms P Xaba (ANC) seconded the proposal.

Presentation by Department of Rural Development and Land Reform on the Sectional Titles Amendment Bill
Ms Reynolds sketched the background to the Bill.  The Sectional Titles Act of 1986 governed building developments where multiple owners held a type of property ownership known as “sectional title”.

Clause 1(a), 1(b) and 1(c) provided for the amendment of the definitions for “developer”, “Minister” and “owner”.  Clause 1(a) made provision for the agent of a developer or the successor in title to act on behalf of the developer in the approval of development schemes.  Clause 1(b) amended the definition of “Minister” in accordance with the current Cabinet structure.  Clause 1(c) deleted references to the Agricultural Credit Act, which had been repealed.  Clause 1(d) amended Section 1(3A) of the Act to make provision for a body corporate to approach the court in cases where the entity was unable to obtain a unanimous resolution.

Clause 2 amended Section 5(5)(a) to give greater clarity to determining the boundaries of a sectional title unit.  The median line would pass through the centre of any structure on an exterior wall, floor or ceiling of a unit.

Clause 3(a) amended Section 11(3)(d) of the Act.  A sectional title register could be opened on more than one piece of land.  If this land was hypothecated under a mortgage bond then Section 40(5) of the Deeds Registries Act had to be complied with.  This situation had led to confusion and the amendment would provide more clarity.

Clauses 3(a), 3(b) and 4 amended Sections 11 and 12 of the Act.  The clauses made provision for the issuing of one certificate of real right of extension and exclusive use areas as reserved by a developer.  Confusion arose when a real right of extension was subdivided.  The amendments would address the issue.

Clause 5 amended Section 14 of the Act.  Currently, a registered sectional plan could only be cancelled by a Court order.  However, there was confusion as the plan could also be cancelled in the event of destruction of or damage to the building.  The amendment would specify that a Court order was not necessary in the case of damage to the building.

Clause 6 amended Section 15(B) of the Act.  There was currently no provision for the issue of a certificate of registered sectional title in respect of a fraction of an undivided share in a unit.  The amendment would make this possible.

Clause 7 amended Section 24(6)(d) of the Act.  The present position was that the consent of every mortgagee was required in the event of an extension of a section resulting in a deviation of more than 10% in the participation quota of any section.  Conveyancers were not in a position to determine such deviations. The amendment would address this problem.

Clause 8 (a), (b), (d) and (h) to (m) amended Section 25 of the Act.  There was currently no provision for the extension of a scheme by the addition of rights to exclusive use.  This was only possible where the rights were linked to the extension of a scheme by the creation of new sections.  The amendment would make it clear that a scheme could be extended by the addition of exclusive use areas. 

Clauses 8(b) and 8(c) amended Section 25 of the Act.  At present there was no mechanism to extend the period of time in which a right of extension must be exercised.  Clause 8(b) allowed for an extension upon agreement between the developer and the body corporate, and Clauses 8(b) and 8(c) provided for the reservation of a right of extension in respect of existing buildings.

Clauses 8(f) and 9(d) amended Sections 25(4)(a) and 27(6) of the Act and reconciled the provisions of the Act with the provisions of the National Credit Act.  Since the promulgation of the Act, the Mutual Building Societies Act of 1965 and the Building Societies Act of 1986 had been repealed.

Clause 9(a) amended Section 27 of the Act by making the registration of exclusive use areas on a sectional plan obligatory.  Clause 9(b) amended Section 27(4) by providing for the vesting of an exclusive use area in the body corporate free from any mortgage bond, a registered lease, usufruct, habitatio or usus.

Clause 10 of the Bill amended Section 29(3) of the Act.  The Act required the consent of every bondholder for purposes of the registration of a servitude over the land owned by the scheme.  This was difficult as new bonds could be registered on a daily basis.  The amendment would specify that the consent of the bondholders on the date of execution would be required.

Section 37 of the Act did not oblige a developer to pay attributable costs in respect of common property subject to future development rights.  Clauses 8(e) and 11(a) would address the problem by deleting Section 25(2)(e) and amending Section 37(1)(b).  Clause 11(b) gave clarity to the payment of contributions where ownership of units had changed by amending Section 37(2) of the Act.  The Act did not make provision for the levying of special contributions even though this situation had existed for some time.  Clause 11(c) amended Section 37 to legalise this situation.

Clause 12 amended Section 44 of the Act to include the regulation of the use of exclusive use areas for the purposes reflected on the plan. 

Clause 13 amended Section 54(2) of the Act to changed the reference to the Association of Law Societies of the Republic of South Africa to the LSSA.

Sections 60 and 60A of the Act made provision for savings and transitional provisions that had already lapsed.  Clauses 14 and 15 removed these provisions. 

Clause 16 contained the short title of the Bill.

Submission by the Law Society of South Africa
Ms Lufundo presented the comments of the LSSA on the Bill.

Clause 1(d) of the Bill amended Section 1(3A) of the Act by substituting the word “notwithstanding” to “subject to”.  The section made provision for a unanimous resolution of all the members of a scheme.  A resolution cannot be passed unless any member adversely affected had consented in writing.  The LSSA read the intention that a Court could declare a unanimous decision to be adopted even if the affected owners had not given written consent.  The LSSA took issue on the grammar of the Clause.  They suggested that it would remove doubt by ending subsection 3(c) by saying “provided that a Court granting relief in terms of sub-section 3(A) shall be entitled to grant such relief, notwithstanding the fact that such written consent has not been obtained.”

The LSSA believed that Clause 8(b) of the Bill permitted the time period in a right of extension to be extended by means of a notarial deed.  The LSSA felt that this insertion was in the wrong place as it would create a definite period.  They felt that there should rather be a separate sub-section worded similar to “the period stipulated in sub-section (1) hereof may be extended for such further period or periods as may be agreed upon by unanimous resolution...”.

The LSSA was opposed to paragraph 10 of the Bill.  Section 29(3) required the formal consent of a bondholder before a servitude or restricted agreement could be registered.  It was now being proposed that consent must be obtained by the Notary Public and filed in his protocol.  Not all conveyancers were notaries.  The amendment would increase the responsibility of the Notary Public as he or she would be obliged to conduct a Deeds Office search to determine the bondholders at the time, obtain their written consent and not release the executed copy of the Notarial Deed until the consents had been obtained.  This situation would be unwieldy.  The LSSA believed the proposed cure was worse than the disease.  It would suffice to insert the words “existing on the date of execution of the notarial deed” into the section with no other changes.

Discussion
Mr Swathe noted that the Department wanted to remove the word “notwithstanding” and replace it with “subject to”.  He asked why the change was considered to be necessary

Mr Ntapane asked if there was a problem in obtaining the consent of all owners where applicable.

Ms Reynolds replied that Section 3(A) of the Act made it possible for the body corporate to approach the Court.  This was subject to Section 3(C).  If the rights of a member were affected, the resolution could only be passed if there was written consent from the owner.  The purpose of the amendment was to open the door for the body corporate.

Mr Letafa observed that the LSSA agreed.  It was a question of semantics.  An individual could not hold the body corporate to ransom.  The principle was the same.

Ms Lufundo said that it was a matter of interpretation.  The Court could declare a resolution to be unanimous.  If the body corporate could not achieve what it wanted then it could approach the Court.  The Court would have to determine what a unanimous decision meant.

Mr Ntapane said that the law must protect society as a whole.  Owners should be prevented from using technicalities to block the implementation of resolutions.

Ms Lufundo said that section 10 was about the right to erect buildings on the common property on a personal account.  The LSSA was concerned that the time period could be extended by the body corporate.  The provision was in the wrong place.  It would be better if this was in a separate sub-section.  The period was different to that in sub-section (1).

Mr Swathe wanted to hear the Department's comment on this proposal.

Ms Steyn had the same question.  She agreed with the stance of the LSSA.

Mr Tsotetsi said that the LSSA only had a problem with the location of the clause.  The period should always be determined.  The Department did not support the proposal as they believed the period should be defined.

Ms Lufundo said that her own perspective was that the provision was well placed.  The provisions gave the developer the right to extend within a stipulated period.  The amendment would give the developer the right to determine the time period.  This would require a rewriting of sub-section (1).  It was a long sentence but it was correct.

Mr Letafa said that the LSSA wanted a second “bite at the cherry”.  The LSSA had been part of the process of the drafting of the Bill but was now changing their tune.  The amendment was correctly placed.  He did not understand the motivation behind the objections.

Ms Steyn said that if the LSSA really wanted to change the Clause they should have made a greater effort to attend the meeting.  She was happy with the wording of the clause.

Mr Ntapane said that the LSSA was opposed to Clause 10.  It was a question of the date on which the servitude would be registered.  Often the notarial agreement was registered by a different notary.  This provision would increase the load on the notary.  The words were already in place.  The important date was that on which the notary deed was executed.

Mr Swathe asked what the difference was between a notary and a conveyancer.

Mr Tsotetsi sketched the current position.  The procedure was impractical.  The new position was that the need for written consent would be limited to the date of implementation.

Mr Letafa explained that a notary and a conveyancer were both officers of the Court and both could register documents.  He was surprised that one of the LSSA complaints was that notaries would have to consult with conveyancers.

Ms Steyn questioned the use of underling parts of the Bill.

Ms Reynolds explained that this was to indicate where long passages were inserted.

Deliberations on the Sectional Titles Amendment Bill
The Committee Secretary read each Clause and the Short Title of the Bill.  The Committee agreed to all the Clauses, without amendment.

The Motion of Desirability was read.  Mr Nchabeleng proposed that the motion was accepted.  Mr Swathe seconded the motion.

The Secretary read the draft Committee Report.  Ms Steyn proposed that the report was accepted and Mr Ntapane seconded the motion.

The Secretary explained that two days had been set aside for public hearings.  As only one submission had been received the process was complete and the Committee would deal with other business at the meeting scheduled for the following day.

The meeting was adjourned.