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Creation of EUAs

20 June 2013

The Sectional Titles Act 95 of 1986 (the Act) makes provision for exclusive use areas (EUAs) to be created in the following different ways:

  • By the developer, simultaneously with the opening of the sectional title register (section 27(1));
  • By the developer subsequent to the opening of the sectional title register (section 27(1A));
  • By the body corporate (section 27(2)), in the rules (Section 27A); and 
  • The developer may reserve a right to extend the scheme by including exclusive use areas only (section 25(1)).

The following different ways of creating exclusive use areas will now be dealt with:

Creation of Exclusive Use Areas by the developer subsequent to the opening of the sectional title register (section 27(1A))

Section 27(1A) reads as follows:

Notwithstanding section 27(1)(a), if no reservation was made by the developer in terms of subsection (1) and the body corporate has not yet been established, the registrar may issue a certificate of real right in respect of a right of exclusive use as contemplated in section 12(1)(f) on application by the developer accompanied by the sectional mortgage bond and the written consent of any bondholder.

It is evident from section 27(1A) that the following must apply before the developer can utilize this section to create exclusive use areas:

  • The developer must not have already reserved exclusive use areas in terms of section 27(1)(a).  If exclusive use areas were reserved as such, this section cannot be utilized to create more exclusive use areas.  However, the developer may create further exclusive use areas if reserved together with the right to extend the scheme, i.e. in terms of section 25(1). 

  • The body corporate should not be established. Regulation 29 therefore, requires the conveyancer to provide a certificate to the following effect:
    • That no unit in the scheme has been sold, donated or exchanged; or

    • If a unit was so alienated, the developer had disclosed in writing to the acquirer thereof that application is to be made for the issuing of a certificate of real right in respect of exclusive use areas. 

Save for the conveyancer’s certificate referred to above, the following documents must be lodged:

  • The developer must apply for the issuing of a certificate(s) of real right in respect of a right of exclusive use areas, which application must be in Form B in Annexure 1 to the regulations. The application will not attract any deeds office fees and will not be endorsed with a BC— code.

  • The certificate of real rights in respect of the exclusive use areas, prepared in prescribed Form G, must be lodged. It must be noted that the Act has been amended to allow for more than one certificate to be issued in respect of each exclusive use area. However, section 27(1A) has not been amended and still provides for the issue of a certificate of exclusive use area. In this instance RCR 56 of 2011 and RCR 69 of 2011 provide that, pending the amendment of the Act more than one certificate may be allowed in respect of those sections where the Act has not been amended.

  • The sectional plans must be lodged in duplicate.  Only one sheet delineating the exclusive use areas will have to be lodged, i.e. in duplicate, in a yellow (coloured) cover. This plan will not be allocated a distinctive number, i.e. a new “SS” no. This sheet will be filed together with the existing plans of the scheme. If sectional plans in the scheme consist of, e.g. 5 sheets, this sheet which contains the exclusive use areas will be numbered as the 6th sheet, e.g. “sheet number 6 of 6 sheets”.

  • Section 27(1A) provides for the lodgement of a sectional mortgage bend and the bondholder’s consent. One can argue that there are no bonds registered over the common property on which the exclusive use areas are depicted and this provision is superfluous. However, section 27(18) reads as follows:

    Upon compliance with subsection (1A) this Act shall apply with the necessary changes to such real right as lilt had originally formed port of the application for the opening of the sectional title registered and such certificate of real right shall be issued subject to any sectional mortgage bond against the land.

The bonds that have to be lodged are the bonds which existed upon opening of the scheme, i.e. conventional bonds which are deemed to be sectional bonds upon registration of the sectional title register, also known as the “scheme bonds”. The bondholders must consent to the registration of the sectional plan of exclusive use areas and that it attaches to the certificate(s) of real right in respect of exclusive use areas issued in terms of section 27(1A). The certificate of real right of extension will be endorsed with the sectional mortgage bonds.

Save for the endorsement of the certificate of real right with the sectional mortgage bond, as discussed above, the section 11(3)(b) schedule of conditions must be endorsed to the effect that a sectional plan of exclusive use areas has been registered.

Creation of Exclusive Use Areas by the Body Corporate (section 27(2))

Section 27(2) reads as follows:

A body corporate, duly authorized thereto by a unanimous resolution of its members, may, subject to the provisions of section 5 (1), request an architect or land surveyor to apply to the Surveyor-General for the delineation on a sectional plan in the manner prescribed of a part or parts of the common property in terms of section 5 (3) (f) for the exclusive use by the owner or owners of one or more sections: Provided that no such delineation shall be made on the sectional plan in terms of this subsection if such delineation will encroach upon a prior delineation on the sectional plan of a part of the common property for the exclusive use by one or more of the owners.

The regulations do not address further requirements or the manner in which this section must be dealt with. The only requirement is for the body corporate to obtain a unanimous resolution and to cause a sectional plan to be prepared The following procedure must be followed:

  • The unanimous resolution need not be lodged. It must however, be submitted to the Surveyor General together with the application for the delineation on the sectional plan as mentioned above.

  • The sectional plans must be lodged in duplicate.

  • Only one sheet delineating the exlusive use areas will have to be lodged. i.e. in duplicate in a yellow (coloured) cover. This plan will not be allocated a distinctive number, i.e. a new SS no. This sheet will be together with the existing plans of the scheme. If sectional plans m tie scheme consist of, e.g. 5 sheets, the sheet which contains the exclusive use areas will be numbered as the 6th sheet. e.g. “sheet number 6 of 6 sheets”.

  • Save for the sectional plans, the only other deeds or documents required we that of the cessions of exclusive use areas in favour of the owners entitled thereto. In terms of section 27(3) the notarial deed of cession by the body corporate must be entered into by the parties. i.e. it must be bilateral.

  • The consents of bondholders over the units and the section 25 right of extension are not required (see RCR68 of 2009 in this regard).

  • According to the Local Government: Municipal Property Rates Act, 6 of 2004, the definition of property refers to a right registered against immovable property. A rates clearance certificate must therefore be lodged with the notarial deeds of cession of the exclusive use areas.

  • A transfer duty receipt must be lodged for each cession.

The section 11(3)(b) schedule of conditions must be endorsed to the effect that a sectional plan of exclusive use areas has been registered . The section 11(3)(b) schedule must also be endorsed with regard to the cessions of exclusive use areas.

Rules regarding exclusive use areas (section 27A)

Section 27A reads as follows :

A developer or a body corporate may make rules which confer rights of exclusive use and enjoyment of parts of the common property upon members of the body corporate: Provided that such rules shall -

(a) not create rights contemplated in section 27 (6);

(b) include a layout plan to scale on which is clearly indicated -

(i) the locality of the distinctively numbered exclusive use and enjoyment parts; and

(ii) the purposes for which such parts may be used;

(c) include a schedule indicating to which member each such part is allocated.

  • It must be noted that when exclusive use areas we provided or in the rules it will not create rights Contemplated in section 27(6). In other words. it will not be deemed to be rights to immovable property over which a mortgaged bond, lease contract or personal servitude of usufruct, usus or habitatio can be registered. It is mere personal rights in favour of the members of the body corporate.

  • Section 35(5) requires the body corporate to notify the Registrar of any substitution, addition. amendment or repeal of the rules. According to regulation 30(6) the notification must be in the prescribed Form V.

  • The rules must be accompanied by a layout plan and schedule referred to in section 27A. It must be submitted for filing in the deeds registry. It must not be examined and the substitution, addition, amendment or repeal thereof will not be noted (section 35(5)(b)). It comes into operation on the dale of filing and therefore the deeds office must note the date of filing on the rules.

  • The application or rules will not be endorsed with a BC — or other code and it will not attract fees . It will merely be filed in the sectional title register.

Marie Grovè
Law Lecturer, Deeds Training
Pretoria

Reader Comments: 2
INDIRA SINGH 21/06/2013:

Thank you for a very informative article. I am now living in a complex, having purchased ,7 years ago. This development is about 15 years old and can you actually believe that all exclusive use areas have not been registered, nor were plans drawn etc. How could that have possibly happened and how could all transfers of the units even been registered in the first place. This is really bewildering and the developer has since absconded and we are now left with this problem.

Allen West 01/07/2013:

As alluded to in the article, not all exclusive use areas need to be registered and indicated on a sectional plan. The informal exclusive use areas are depicted on a sketch plan and allocated to owners in the Rules. However, this does not mean that owners are now ad infinitum restricted to such informal rights. The Body Corporate can have the rights depicted on a sectional plan and cede the rights to the rightful holders. These rights are then deemed to be immovable property capable of being mortgaged etc.

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