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Maintenance and Sectional Titles: Who must pay?

Maintenance and Sectional Titles: Who must pay?

Posted on  25 June 2013

An issue that can often raise the blood pressure of sectional title owners, is the question surrounding maintenance within a sectional title scheme, particularly where maintenance costs are going to cost an arm and a leg. So where does the responsibility of the sectional title owner for maintenance begin and end?

To answer this question, one must first recognize that there are different types (or classes) of property when dealing with sectional title schemes. They are common property, sections and parts of the common property that are subject to rights of exclusive use by one or more owners in the scheme.

The Sectional Titles Act dictates that the Body Corporate is responsible for the maintenance of the common property. This is property not forming part of a section and includes the land in the scheme. The Body Corporate must see to it that the common property is maintained, repaired when necessary and foot the bill for the repairs. The common property can include, inter alia, elevators, the outside of the building, roof, common gardens and parking bays, driveways, security systems, street lights, communal passages and staircases, and shared swimming pools. An exception can exist where it comes to geysers. Often a geyser is situated above the ceiling, and can then be seen to form part of the “common property”, yet in this instance, the owner often remains responsible for the upkeep and repair and not the Body Corporate.

The maintenance of sections is the sole responsibility of the owner. A section extends from the centre line (median line) of the walls, floors and ceilings, this area is the property of the owner and with ownership of said area follows the responsibility for maintenance and repair. Keep in mind that shirking this responsibility may have a negative effect on another section. Should there for example, be a leak in your section and the water causes damage to a section below or adjacent, you may face a claim for damage from the owner of the section below or adjacent and not the Body Corporate.

There is a noteworthy exception to the maintenance of a section. The Body Corporate is responsible for maintenance of “pipes, wires, cables and ducts” in a section that also serve any other section or the common property.

The third type of property is the exclusive use areas. As the name suggests, these areas remain common property and the responsibility for maintenance rests with the Body Corporate, but the Sectional Titles Act states that costs associated with these areas must be recovered from the owner or owners who enjoy the rights of exclusive use to the said areas. On the one hand the Body Corporate must see to the maintenance of these areas, but the owner or owners are financially responsible. It is common practice that the owner who is financially responsible for this area, maintain the area with the result that it is unnecessary for the Body Corporate to spend money on this area and then still recover such from the owner.

Although the question of maintenance appears straightforward, disputes are common and frequent. A simple example is where a leak in section A causes damage to section B or the common property and the owner of A does not repair the leak. May owner B or the Body Corporate take matters in their own hands? How will they gain entry without permission from owner A? If the Body Corporate or owner B repairs the leak and owner A refuses to reimburse the Body Corporate or owner B, what recourse can be followed?

Because of the financial and legal implications of maintenance and the potential complexity of a dispute it is advisable that legal advice be obtained in the event of such a dispute to help determine the allocation of responsibility and merits of your claim.

Taken form: 

Lange Carr & Wessels Inc. Newsletter 6-2013

Meat our Head Office team

The Umbrella Group Postmasburg branch

Front:

(ltr) Marizanne Coetzee (Admin PA), Karin Coetzee (CEO & Principal), Elize Hansen (Coetzee Eiendomme Agent), Elaine Henning (Reception)

Back:

(ltr) Douw Honiball (Coetzee Eiendomme Agent), Jacques Coetzee (CEA Principal & General Manager), Ulandi du Plooy (Coetzee Eiendomme Agent)

Absent:

Sunet Coetzee (Legal)

WRITTEN TRUSTEE RESOLUTION MUST BE IN PLACE

WRITTEN TRUSTEE RESOLUTION MUST BE IN PLACE BEFORE SIGNING SALE AGREEMENT, OTHERWISE AGREEMENT IS VOID

Jansen NO and Others v Ringwood Investments 87 CC (59771/2009) [2013] ZAGPPHC 129
(20 May 2013)

This is one of many judgments confirming the requirement that where one of the parties to a sale agreement of land is a trust, the agreement must be signed by all the trustees or by one trustee acting on written authority of the other trustees. The written resolution must be in place at the time of signing the agreement, and ratification is not possible (unlike, for example, the position with a company). Where the resolution is absent, the agreement is void.

read more
The Judgment
Summary of the Judgment

© Copyright 2013 STBB | Smith Tabata Buchanan Boyes. All rights reserved.

Find the Finance to Fund Your First Home

Find the Finance to Fund Your First Home

Buying a home is the biggest financial commitment that most people will make in their lifetimes. You’ll need to line up a deposit and calculate what monthly bond repayment you can afford. For those who are struggling to afford it all, ooba, South Africa’s biggest bond originator, says there are options.
When you start thinking about buying a home, the first thing that you need to do is save up for a deposit. “This is both a good way to assess your ability to afford your repayments, and it makes the bank far more likely to approve your home loan,” says Linda Rall, ooba’s KwaZulu-Natal sales manager.
Then remember that aside from your deposit and your monthly repayments, you will also have to come up with the cash for the legal costs, transfer duty, bond registration and bank fees. ooba has several online tools to help you calculate the costs involved in your property purchase, such as your monthly bond repayments, how much you need to save every month for a deposit, and bond and transfer costs, at www.ooba.co.za/calculators.
“Don’t despair if you have found your dream home but you find you are short on funds for the deposit and monthly bond repayments,” says Rall. “At this point, you still have options. You can try to find a cheaper home or cheaper area, you can consider turning to someone close to you for help, or you can try to borrow additional money to make up the shortfall.
She says that it is best to have your affordability assessed upfront. “ooba can provide you with a prequalification that will give you a clear understanding of what you may qualify to buy and what amount you will need to save up in order to provide the required deposit.”
Getting a guarantor
If you find that you are unlikely to secure a home loan based on your own income, you can approach a family member to act as a guarantor. Not all banks accept the offer of surety by another party, but for those who do, the person signing surety must qualify for the home loan in their own right, and should have a direct interest in the property, like a child living on the premises.
“It is very important that both parties are happy with this arrangement,” says Rall. “Remember that should you default on your monthly payment, the guarantor will be liable. So you have to be pretty certain that’s not going to happen, your guarantor has to be confident that they will manage if it does, and you should have a written agreement in place to cover this eventuality.”
Buying with a partner
Another alternative is finding a partner to share the purchase of your new home with. “This becomes a massive personal commitment as well as a financial one,” says Rall. “So you need to be sure that you have worked out all the ins and outs of the process before you sign the offer.”
She says that property buying partners should commit certain things to writing – what will happen if one partner wants to leave or in the unfortunate event of the death of one of the partners. These outcomes should be committed to a contract and a will drawn up by a lawyer.
“Both parties should also be willing to disclose any financial issues that might affect the partnership, as they will both have to be independently assessed by the bank as individual buyers,” says Rall.
Once the property has been purchased, she advises that the partners should then ensure that the costs of maintaining the property are equally shared, or at least that they are carefully recorded, so that the proceeds can be split fairly once the property is sold.
Finding the money elsewhere
If none of these options work for you, it is possible to obtain a short-term loan of up to R150 000 to bulk up your deposit, but be aware that you will have to show affordability to cater for the short-term loan repayment and such loans are generally at a high rate of interest. Or if you belong to a pension or provident fund, it can be possible to use that as security to borrow the deposit for your homeloan.
Buying your first property can be a confusing and daunting exercise, and it’s very useful to have the insight of an expert to support you while making these tough decisions and commitments.
“If you use an expert bond originator like ooba, your bond will be shopped around to all the banks, improving your chances of approval and of getting a better interest rate, all at no cost to you,” says Rall. “ooba currently gets approval for 73% of the home loans it facilitates, while the national bank average is 54%, which means that you have a much improved chance of a successful and well-priced home loan  if you go through ooba.”

10 Reasons why we recommend ooba

FLISP

What is FLISP?
Finance Linked Individual Subsidy Program, better known as FLISP, was developed by the Department of Human Settlement to enable sustainable and affordable first time home-ownership opportunities to South African citizens and legal permanent residents earning between R3 501 and R15 000 per month, (the “affordable” or “gap” market).
Individuals in these salary bands generally find it hard to qualify for housing finance; their income is regarded as low for mortgage finance, but too high to qualify for the government “free-basic-house” subsidy scheme.

What to do with FLISP?
Qualifying applicants may use FLISP to do one of the following:-
- buy an existing, new or old, residential property
- buy a vacant serviced residential-stand, linked to an NHBRC registered homebuilder contract; or
- build a residential property on a self-owned serviced residential stand, through an NHBRC registered homebuilder
The once-off FLISP subsidy amount ranges between R10 000 and R87 000, depending on the applicant’s monthly income.
The maximum price of a property that can be financed through FLISP is R300 000.

Who can apply?
FLISP Applicants must meet the following qualifying criteria:-
- South African citizen with a valid ID; or permanent residents with a valid permit
- over 18years and competent to legally contract
- never have benefitted from a Government Housing Subsidy Scheme before
- have an Approval in Principle of home loan from an accredited South African financial institution
- first time home buyer, earning from R3 501 to R15 000 per month
FLISP is for residential properties in formal towns where transfer of ownership and registration of mortgage bond is recordable in the Deeds Office.

Important Documents
The following CERTIFIED COPIES are required as Supporting Documents when applying for FLISP:-
- RSA Bar Coded Identity Document (ID)
- Bar Coded Permanent Residence Permit (where applicable)
- Birth Certificates / RSA IDs of all financial dependents (where applicable)
- Proof of Foster Children Guardianship (where applicable)
- *Marriage Certificate, Civil Union Certificate or Cohabiting Affidavit proof of Partnership (applicable)
- Divorce Settlement (where applicable)
- Spouse's Death Certificate (where applicable)
- Proof of Monthly Income
- Home Loan Approval in Principle/Grant Letter from an accredited Lender
- Agreement of Sale for the residential property
- Building Contract and Approved Building Plan (where applicable)
* Affidavits required for informal marriages solemnised under the SA Civil Law, accompanied by sworn statements to prove the authenticity of the relationship

FLISP Summarised
FLISP enables qualifying beneficiaries to reduce the initial mortgage loan amount or augment the shortfall between the qualifying loan and the total house price
Qualifying Criteria for FLISP:
- RSA citizen or Permanent Residents
- over 18years and competent to legally contract
- First time Housing Subsidy Scheme beneficiary
- have an Approval in Principle for a Home Loan
- Monthly Income from R3 501 to R15 000
The once-off FLISP subsidy amount ranges between R10 000 and R87 000, depending on monthly income. FLISP may be used for the following:-
- buy an existing, new or old, residential property
- buy a vacant serviced residential-stand; or
- build a residential property
The maximum price of a property that can be financed through FLISP is R300 000.

TPN Residential Rental Monitor Q1 2013

As a result of the shortage of residential rental stock, rental agents and landlords are in the fortunate position of being able to pick and choose only quality tenants. The current scenario is further characterised by an on-going improvement of tenants considered to be in good standing, with Q1 of 2013 strengthening to a record 84%, which includes sub-categories of 71% of tenants who Paid on Time, plus 3% paid in the Grace Period and 10% Paid Late. Pleasingly only 8% of tenants were recorded as being in the Did not Pay category while 8% made a Partial Payment.

Click here to read the full TPN Residential Rental Monitor

While TPN’s Residential Tenants in Good Standing continues to improve; TransUnion’s SA Consumer Credit Index continues to decline and the National Credit Regulator’s Credit Report rings alarm bells for unsecured lending.

TPN continues to caution landlord’s and rental agents to perform strict tenant, credit and affordability assessments and apply their credit and application process to all potential adult occupants (i.e. both spouses).

TransUnion SA Consumer Credit Index Q2 2013

The TransUnion SA Consumer Credit Index (CCI) decreased to 43.6 in Q2 2013 from a revised 43.8 in Q1 2013 (preliminary 44.4). The index is a measure of consumer credit health where 50.0 is the break-even level between improvement and deterioration. Consumer credit health has now been deteriorating for four straight quarters.

Click here to read the full TransUnion SA Consumer Credit Index Q2 2013

National Credit Regulator Consumer Credit Market Report Q4 2012

Notable extracts: unsecured credit book grew by 40.95% year-on-year; but the deterioration of the unsecured credit is a cause for concern with only 65.89% of the accounts in current; or stated differently 34.11% of the 8.5 million unsecured credit accounts are in arrears.

Click here to read the full National Credit Regulator Consumer Credit Market Report Q4 2012

Tenant Profile Network

What Was Getting a Bond 21 Years Ago Like?

For the writer, who became a co-home owner in 1992, no pleasures existed quite like those enjoyed by parents. Many who were privy to prime interest rates at an all time low of 5.50 percent in 1962. Instead were the realities of entering the property market just before prime escalated to an all time high of 25.50 percent in 1998.

However, the notion of ‘no pain no gain’ rang true as the size of the bond eventually shrunk as prime lending rates decreased, recorded to have averaged 12.55 percent between1957 to 2013. What also happens over time is the necessity to improve our family’s prime asset. As a result came the forfeiting of a bond free existence of several years. Considering uncertain economic times, borrowing money to pay for renovations has been a positive experience all round, the product of much obliging bank and bond originators.

Borrowing at 0.40% below prime at 8.10% made sense when comparing annual price escalations of building and related costs, to the time spent in accumulating sufficient cash flow to cover the costs of improvements. The re-paying of a newly registered bond as quickly as possible will be offset by added capital value as well as an improved lifestyle.

What the bank asked for

As reflected in the title deed of the property, both owners may apply for the new bond to be registered in both their names. However, for the purposes of re-payment of the bond, the highest earner becomes the primary bond applicant, also from whose account payments will be deducted.

In addition to identification, is proof of residence through utility bills, proof of income, and a copy of the title deed proving no outstanding debt to be attached to the existing asset.
In addition is proof required that both applicants reside at the same property related to the bond. Worth noting here is that municipal rates and tax bills should reflect both names of registered property owners.

Applicants are requested to supply recent monthly payslips or in the case of informal employment, statements of business accounts, and separate tax reference numbers and utility bills.

The process that followed

Documentation submitted against the bank’s checklist saw a speedy property evaluation by  the bank’s assessor. A 20 minute walk about, aided by the valuator’s access to digital information, based on the municipal valuation, enabled insurance calculations for replacement value of the property. Bond approval was communicated one week after application.

Acknowledgement of receipt from the bank’s conveyance firm resulted in the signing process two weeks later. A minimum of a one hour appointment allows working through the long list of documents, thoroughly communicated by legal professionals.

List of documents signed with conveyance attorneys

Indemnity by the borrower in favour of the bank.

Bank New Home Loan Agreement - worth noting here is life insurance is required for both bond applicants to cover loan amounts, as well as property insurance for replacement value.

Terms and Conditions of Loans Secured by Mortgage Bonds Over Freehold Property - covering access bond facilities, termination of contract, defaulting, data protection, etc.
A Quotation and Pre-agreement Statement – summarising all relevant costs.

A Continuing Covering Mortgage Bond - this secures the indebtedness of the mortgagor to the bank.

After signing above-mentioned documents and handing over original title deeds of the property, documentation was submitted to the central Deeds office, now awaiting registration within the next three weeks.

Most notable in the world of bond origination post 2008, is the protection both of banks and consumers against over indebtedness. Easy digital access and tracking of bond application information on widely available digital domains added to a positive experience, all round.

 Michael Otto

Nedbank

Meet our Helderberg Team -  Brigitte Barabas, Annie Raats and Belinda Pontac 

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Welcome to our new blog page. We will be adding information as we proceed in future All staff - please mail me all your info for the blog.