A significant number of sectional title schemes, built when lower densities were permitted under town planning regulations, include undeveloped areas of common property which can either be subdivided or further developed.
When a sectional title body corporate considers the alienation of t part of the common property so that the area will be removed from the scheme and become a separate property the provision of section 17(1)of the Sectional Titles Act, 1986 ("the Act") applies. The section is headed "Alienation and letting of common property" and reads:
'The owners and holders of a right of extension contemplated in section 25 may by unanimous resolution direct the body corporate on their behalf to alienate common property or any part thereof, or to let common property or any part - thereof under a lease, and thereupon the body corporate shall, notwithstanding any provision of section 20 of the Deeds Registries Act, but subject - to compliance with any law relating to the subdivision of land or to letting a part of land, as the case may be, have power to deal with such deed required for the purpose: Provided that if the whole of the right referred to in section 25 or section 60(1)(b) is affected by the, alienation of common property, such right shall be cancelled by the registrar with title consent of the holder thereof on submission of the title to the right."
Prior to this amendment in 1997, the introduction to this provision read:
The owners may by unanimous resolution direct the body corporate ….
The purpose of the 1997 amendment to the introduction was clearly to add the requirement that the holder of any real right under section 25 of the - Act should consent to any alienation or letting under this section. But the wording is awkward, suggesting that the unanimous resolution must be taken by owners and the holder of a section 25 right, i.e. that the holder of a section 25 right can and must participate in the taking of the unanimous resolution.
A unanimous resolution is, in terms of the definition in section 1 of the Act, a consensus of members of the body corporate. The holder of a future extension right under section 25 of the Act is not, in that capacity, a member of the body corporate in terms of section 36(1 )of the Act. In addition, the rights in terms of section 25 may not be applicable to the area which the body corporate Is considering leasing or alienating.
The interests of any section 25 right holder which need protection require not that he or she participate in the body corporate's decision-making process, but that any unanimous resolution taken by the body corporate which affects a part of the common property which is subject to the holder's rights should not become effective without the holder's approval.
The better interpretation of the provision is that the body corporate must take a unanimous resolution authorising the alienation or leasing and, in addition, the holder of any right in terms of section 25 which applies to the part of the common property in question must give consent.
The wording should be adjusted to make this point clear and more details of the additional consent should be inserted. Must the consent be in writing? Must it be obtained prior to the unanimous resolution or can it be given at any time thereafter? Assuming that the consent may be given at any time, the introduction to the provision should read:
"The owners may by unanimous resolution, and with the written consent of the holder of any applicable right of extension contemplated in section 25, direct the body corporate on their behalf to alienate common property or any part thereof, or to let common property or any part thereof under a lease...
Until the section is amended to make its Intent more clear, it is suggested that the body corporate should ensure that the holder of any section 25 right participates in the process of obtaining the unanimous resolution, for example by specifically approving the wording of the resolution and the description of how the proceeds of the alienation are to be distributed amongst the body corporate, owners and the holder of the extension rights. In addition, a formal written consent should be obtained to the unanimous resolution in the form in which it is recorded in the body corporate minute book.
This matter will be referred to the Sectional Title Regulation Board for consideration - Editor (SA Deeds Journal)
Implementing decisions
Leave a comment: