Freehold land ownership has the following characteristics:
- The owner of the “property” owns the ground, the underground and the space above it.
- All improvements (buildings) permanently acceding to the ground belong to the owner of the property.
- The property means the ground plus any improvements thereon.
- One cannot own improvements on the property belonging to another.
- The owner must pay for municipal charges in respect of services directly to the municipality.
- The owner is responsible for the maintenance and upkeep of the property, that surrounds, him or herself.
- A Homeowner’s Association may be required in respect of land jointly or co-owned by multiple owners in an urban area, so as to regulate common interest matters such as the joint security needs of the occupants of the homes in the immediate community – usually there is an association agreement which provides, inter alia, for levies to be raised against each home to cover such joint expenses.
- Freehold does not permit the ownership of multiple layers of overlapping space in the sky; such as blocks of flats, office blocks, where different people own different apartments built on top of each other.
- To accommodate such ownership, our Parliament created Sectional Title ownership.
Sectional Title ownership has the following characteristics:
- The owner of the “property” owns a unit, or “section”, the outer boundaries of which are the floor, ceiling and median of the outside walls.
- The owner also has an undivided share in the ownership of all common areas on the land on which the sectional scheme is built, such as the gardens, perhaps a club-house, visitors parking areas, the outside of exterior walls, etc.
- The ownership of the common areas is through the Body Corporate which has very clearly defined and legislated minimum responsibilities; including determining a budget for the financial year and deciding what levies the owner of each section must pay.
- This includes:
- Insurance of all the improvements on the property;
- Maintenance of the gardens;
Maintenance of the roads and/or driveways within the complex;
- Security for the complex;
- Water and electricity consumption for the complex, unless individually metered;
- Maintenance of the exterior of all improvements (buildings) within the complex and the perimeter wall or fence of the complex;
- Ensuring that each owner pays their levy as per the budget and the “participation quote” (the floor area of the section as a percentage of the total floor area of all the sections on the property);
- Determining suitable rules for the general behavior within the complex and that they are adhered to;
- The owners are responsible for paying the levies to the body corporate;
- The body corporate is thus responsible for the maintenance of the exterior of the buildings and the surrounds and not the individual owner.
- The sections are usually a lot closer to each other than a home on a freehold property, so it is very important that suitable rules are introduced to govern the relations between the occupants of the sections – the Sectional Titles Act provides comprehensive guidelines in this regard but these can be changed by the Developer in the beginning or by the body corporate later on.
- The owner will usually be responsible towards the municipality directly for rates, sewerage removal and refuse removal and must open an account with the municipality in this regard.
- In addition to the ownership of the section, an owner may also have an exclusive right to the use of a defined part of the common property within the scheme – such as parking bays, storerooms, servant’s rooms, etc – these are registered by way of a Notarial Deed of Exclusive Use Area.
Andrew Smith has 26 years of conveyancing experience, including subdivisions, township developments, sectional title developments, servitudes, usufruct transfers, general transfers, mortgage bonds, and uses his tax background to structure complicated transactions in the most tax efficient manner.