News

WHEN DOES THE EXTENSION OF A SECTION BECOME THE EXTENSION OF A SCHEME IN A SECTIONAL TITLE SCHEME?

Interesting • 6th Feb, 15

 

BACKGROUND

1.1. In a recent matter the owners of a number of units have extended their sections in various ways over time but these extensions are not reflected on the sectional plans registered at the Deeds Registry at Cape Town.  It is not clear what the nature of the consents were which may or may not have been obtained from the relevant Body Corporate by these owners at the time of the construction of their extensions.  However, a special resolution was passed at the most recent annual general meeting in an attempt to regularize those extensions. 

1.2. These owners (“the other owners”) have also caused a land surveyor to measure the extensions to their sections and to frame draft sectional plans of extensions in terms of section 24 of the Sectional Titles Act 95 of 1986 (“the Act”) in respect thereof.

1.3. Another owner (“the Client”) also wants to extend his section.  He has been advised that he should follow the procedure prescribed in section 25(6) of the Act.

2. PHYSICAL NATURE OF BUILDING AND OF EXTENSIONS

2.1. The building housing these sections is constructed in a step-down fashion down the side of an incline with the highest level adjacent to the access road and the bottom level close to the beach at the bottom of the incline.  Each level contains one unit.

2.2. The step-down fashion in which the building was constructed caused a number of these sections to be constructed several metres above ground level.  Consequently, the extensions that have already been effected had to be built in a cantilevered mode into the air space adjacent to the outside walls of the relevant sections.

2.3. The extensions of the Client’s section on level four of the building would have to be built into the air space adjacent to the section as well.

3. CONFLICTING LEGAL ADVICE

3.1. The other owners have conceded that their extensions are illegal and they, on the advice of their attorneys, have attempted to rectify that by applying the provisions of section 24 of the Act to this situation.  So, they have adopted a special resolution at their most recent annual general meeting which will enable them to submit the sectional plans of extensions to the Surveyor General for approval.  It has been established that the relevant Surveyor General will not dictate to the parties which section of the Act should be used in these circumstances.  Once these plans have been approved by the Surveyor General the other owners will no doubt proceed to the registration thereof in the relevant Deeds Registry. 

3.2. The Client has voted against the special resolution at the annual general meeting on the basis of the advice of his attorney that section 24 of the Act is not applicable in the circumstances of this matter.

4. APPLICABILITY OF SECTION 24 OF THE ACT

4.1. Section 24 of the Act deals with a situation where an owner wants to increase the floor space of his section (internal extension) as well as where he wants to extend the boundary of his section (“the external extension”).  The internal extension of a section does not usually require the intervention of the body corporate because it does not involve any dealings with the common property, which the members of the body corporate own in undivided shares determined by the participation quota applicable to each owner.  This aspect usually concerns the attention of the Trustees only because most sectional title schemes have a conduct rule that requires owners, who want to increase the floor space only in their section, to obtain the consent of the Trustees.  The internal extension may also affect the available bulk in terms of the relevant zoning scheme regulations of that development and if so a departure may be required to which of course persons whose interests are affected could object to, which would include other members of the body corporate.

4.2. The external extension does affect the common property and thus such an extension would require the consent of the other owners of sections because they own the common property but their consent is only required in terms of a special resolution adopted at a properly set up annual general meeting as stipulated in the Act for this purpose (75% of the votes both in number and in value).  However, section 24(1) does not refer to common property, which clouds the issue.

4.3. Common property is defined in the Act as the land included in the scheme,  such parts of the building as are not included in a section and the land referred to in section 26 (land acquired by the body corporate after the scheme was first established).

4.4. When a developer applies to open a sectional title register and to register a sectional plan in respect of a sectional title scheme, the sectional plan must show on the various relevant sheets, the position of the building on the land, exclusive use areas and such areas as are delineated as common property [regulation 5 (2)(c)(ii)].  It is important to note that all the areas in respect of which rights can be exercised are either indicated on the sectional plans or are described in the relevant registered sectional deed of transfer or notarial deed of cession (the outside wall of the building containing the sections form part of the common property but are not indicated as such on the sectional plans or indicated on the sectional plans as such).

4.5. When sectional title property (section, exclusive use area and common property respectively) is transferred to a buyer by the developer, the sectional title property is described in the Sectional deed of transfer with reference to the section concerned and an undivided share in the common property.  Those rights were vested in the developer by way of certificates of registered sectional title when he applied for the opening of the sectional title register and the registration of the sectional plan.  When he then transfers those rights to a buyer the buyer will obtain title to a section and an undivided share in the common property which is determined by the participation quota allocated to him.  Should such a buyer want to know which areas of the development are common property he can consult the registered sectional plans where the common property is clearly marked.

4.6. One of the reasons why section 24(1) of the Act only requires a special resolution by the body corporate to authorize the extension of the boundaries of a section is because the body corporate as owners of the common property are able to deal with such rights because those rights have vested in the members of the body corporate when they obtained title to those rights through registration in the Deeds Registry.  It stands to reason that the boundary of the section to be extended has to border on common property marked as such on the registered sectional plan because that portion of the common property is intended to be incorporated into the adjacent section thereby being converted from common property to being part of an exclusively owned section.

4.7. The identification of the common property in this fashion accords with a fundamental principle of land registration in South Africa, namely, that each unit of land must be the subject of a registered title thereof and be reflected on an approved diagram (The Law and Practice of Conveyancing in South Africa, RJM Jones, 2nd edition, page 1).  Moreover, section 3 of the Act stipulates that the provisions of the Deeds Registries Act 1937 shall apply to all documents registered or filed in terms of the Act.  Effect is given to this principle by the registration of title to the section and undivided share in the common property which are both delineated on the relevant registered sectional plan.

4.8. One of the obvious consequences of having sections and common property delineated on the sectional plan is that it establishes the extent of such a sectional title development, i.e., the number of sections, exclusive use areas and of course the common property.  The only extension that is allowed within the established confines of this scheme is the extension of a section by incorporating delineated common property into a section.  At the end of this process the same number of sections are comprised in that scheme.

4.9. There is also the view that, as applies in conventional immovable property, the air space above the land within the boundaries of the land, is owned by the owner of the land to the extent not restricted by legislation or the common law. This view then maintains that as the body corporate is the owner of the land it also owns the air space above the land and therefore the owner who wishes to extend the boundary of his section into such air space can use the procedure prescribed in section 24 of the Act to do so.  In addition to the foregoing reasons why such an approach is wrong, the provisions of section 2 of the Act specifically excludes anything to the contrary in any law or the common law and then goes on to provide that where a building on land is comprised in a scheme, it may be divided into sections and common property in accordance with the provisions of the Act.  Clearly, once that is done the land and the building can no longer be deemed as conventional immovable property which ascribes certain rights thereto in terms of the common law or legislation.

5. APPLICABILITY OF SECTION 25 OF THE ACT

5.1. Section 25 of the Act deals with the extension of schemes, rather than sections.  In terms of section 25(1) of the Act a developer may, upon opening of the sectional title register and registration of the sectional plan, also reserve in his favour future development rights in respect of the scheme.  These rights can be reserved by applying for a Certificate of Real Rights to be issued to him in which the category of rights are set out, namely, whether he wants to build another building on a separate part of the land, or whether he wants to extend an existing building horizontally, or whether he wants to extend an existing building vertically.  In addition to this document he also has to file a plan to scale in terms of section 25(2)(a) of the Act showing the exact extent of how he proposes to extend the scheme.  The effect of the reservation of these extension rights is that the ownership by the members of the body corporate of the common property is provisionally curtailed to the extent shown on these plans.  However, the actual adjustment of the undivided share of the common property of each owner takes place upon the actual registration of the sectional plan of extension in terms of section 25(12)(a) of the Act.

5.2. In the event of the developer failing to reserve these extension rights in his favour at inception, or having reserved these rights he fails to exercise such rights before expiry thereof, section 25(6) of the Act provides that these rights then vest in the body corporate.  However, although these rights may vest in the body corporate, they have to follow the procedure prescribed in the section before they can actually exercise such rights.  First, they must have the Registrar of Deeds issue a Certificate of Real Rights to them in respect of the category of rights [section 25(1)(a), (b), or (c)] that have vested in them, together with the same plan in terms of section 25(2)(a) of the Act that the developer was required to lodge with the Registrar of Deeds.  Once this certificate has been issued to the body corporate they have title to their vested rights and they can accordingly deal with those rights. 

5.3. It is important to understand that although the extension discussed here also requires the boundary of a section to be extended, and as such is seemingly the same action for which section 24 of the Act provides, the difference is that the nature of the rights employed in this instance is different.  In the typical scenario where section 24 of the Act applies the rights are clearly common property as marked on the relevant sheet of the registered sectional plan.  In this scenario no such identification of the rights are marked on the sectional plans.  The reason for that is that these are extension rights which have not yet been transformed into sections and common property.  That process still has to be followed by the body corporate as prescribed in terms of section 25(6) of the Act.

5.4. A simple test to determine which of the sections of the Act would apply to a particular scenario is to review it against the following situation.  If there had been a developer who had reserved the extension rights in terms of section 25(1)(b) of the Act and the some owners followed the advice of their attorneys that they merely need to obtain a special resolution from their fellow members as prescribed in terms of section 24(1) of the Act to extend their sections, they would have found themselves at the receiving end of legal action from the developer who would contend that they have purported to infringe his rights under that section.  They would clearly be in the wrong.  The situation does not change because there is no developer.  These extension rights have not expired, they have vested in the body corporate in terms of section 25(6) of the Act. 

5.5. So, the question could then be asked, if the rights under section 24(1) of the Act could be dealt with because they vested in the body corporate, what is different in this instance where the rights have also vested in the body corporate, albeit in terms of a different section.  The difference is under the typical scenario where section 24(1) of the Act should be used, the rights have not only vested in the body corporate, they can exercise those rights because they have title to those rights and the distinction between sections and common property had taken place.  In this scenario that has not happened yet.  The second aspect to be considered is that the nature of the rights differ.  Section 24(1) of the Act deals with common property rights, whereas section 25(6) of the Act deals with extension rights.

5.6. The question could also be raised that both sections 24 and 25 of the Act could apply in these circumstances because the outside half of the outside walls of the building is common property in terms of the Act (section 24) and that the extension rights in terms of section 25 of the Act vests outside of this strip of common property.  However, Section 25(1) of the Act stipulates that a developer may … complete from time to time a horizontal extension of an existing building…..on a specified portion of the common property.  This seems to include that strip outer wall as common property and would therefore entitle the developer to deal with it to the exclusion of the body corporate.

6. GOOD CAUSE IN LAW

6.1. The standard of consent required from the body corporate differs when section 24(1) of the Act applies than when section 25(6) of the Act is invoked.  In terms of the former, a special resolution is required, whereas in terms of the latter the written consent of every member of the body corporate is required, provided that such consent may only be refused on good cause in law.  This difference may account for the number of extensions where the parties concerned have opted to use the section 24(1) of the Act procedure, rather than the procedure prescribed in terms of section 25(6) of the Act.

6.2. There also seems to be differing views on what would constitute good cause in law to refuse consent for such extensions.  Some practitioners are of the view that these provisions should be interpreted more restrictively, whilst others tend to interpret these provisions less restrictively.  An example of a restrictive interpretation would be where the relevant member of a body corporate would refuse to give his consent in terms of section 25(6) of the Act if the proposed extensions for which his consent is sought, would threaten the structural integrity of his own section.  An example of a less restrictive interpretation would be a situation where the relevant member of the body corporate would know that the section, after the proposed extensions have been effected, would be used for an illegal purpose, may also be entitled to refuse his consent in the circumstances.  No clear guidelines have as yet emerged on whether a restrictive or less restrictive interpretation would be applied.

 

William Du Toit

 



Categories

Latest News

Archives

 
home | the practice | services | gallery | news | careers | associations | contact
© copyright kritzinger.co.za
developed by: Truth Design