The Share Blocks Control Act 59 of 1980 (hereinafter referred to as the Share Blocks Act) provides for the conversion of a share-block scheme to a sectional title scheme and the subsequent transfer of sectional title units in such a scheme to individuals. The said conversion entails the registration of sectional plans and the opening of a sectional title register in the deeds registry (refer to section 8 of the Share Blocks Act in this regard).
Subsequent to the registration of the sectional plans and opening of the sectional title register (opening of a sectional title scheme) the share-block company (as developer) may transfer units to individual share-block holders and/or third parties (individuals not being share block holders). From a conveyancing perspective it is imperative to distinguish between transfer of units to share block holders and transfer of units to third parties (non-share block holders) by the share block company. Transfer of a unit from the share block company to a share block holder is effected in terms of section 8(3)(c) and item 8 of Schedule 1 to the Share Blocks Act.
Transfer of a unit by the share block company to a third party is effected in terms of the Sectional Titles Act 95 of 1986 (hereinafter referred to as the Sectional Titles Act). Subsequent transfers of units by sectional owners of units are also effected in terms of the Sectional Titles Act. It stands to reason that, owing to the procedures prescribed by the respective legislation, there will be a difference in the procedure in the above-mentioned instances.
Transfer of a unit to a share block holder
Transfer of a unit to the share block holder is usually effected by a sectional deed of transfer, to be prepared by a conveyancer in the prescribed Form H to the Sectional Titles Act. The typical deeds and documents to be lodged for the registration of such a transaction are:
- the title deed of the unit (certificate of registered sectional title in favour of the share block company);
- the sectional deed of transfer in favour of the share block holder drafted in accordance with prescribed Form H;
- all mortgage bonds (if any) over the sectional title scheme and
- the written consent by such bondholders to the release of the unit from the operation of the bonds or the cancellation of the bonds (if applicable);
- the special power of attorney to pass transfer;
- the transfer duty of receipt;
- a rates clearance certificate for the land if the transfer will result in the establishment of a body corporate; or a rates clearance certificate for the unit if the units are separately rated; and
- the conveyancer's certificate in terms of section 15B(3)(a) of the Sectional Titles Act;
- other documents prescribed by law.
Conveyancers and deeds examiners should pay special attention to the causa in the deed of transfer (and special power of attorney) which should be similar to the following:
"Transfer of the said unit arises from the following:
The sale by private treaty on the _ _ _ _ _ _ _ _ _ _ day of _ _ _ _ _ _ _ _ _ _ [date] for the sum of _ _ _ _ _ _ _ _ _ _ _ [purchase price of shares] of share block(s) No(s) _ _ _ _ _ _ _ comprising _ _ _ _ _ _ _ _ [number of ] shares and linked loan account in _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ [full name of company], and the application by the transferee to the transfer on the _ _ _ _ _ _ _ _ _ _ [day] of _ _ _ _ _ _ _ _ _ _ [date] for the conversion of the transferee's right to occupy that part of the building shown and more fully described on Sectional Plan No. SS _ _ _ _ _ _ _ _ as section No. _ _ _ _ _ _ _ [number of unit and name of scheme] into sectional title ownership, such application being by way of exercise of the option conferred on the transferee by the provisions of item 8(1)(b) of Schedule 1 to the Share Blocks Control Act 59 of 1980."
- The date of the transaction reflected on the transfer duty receipt must be the date of the application for transfer of the unit - not the date of purchase of the shares.
- The certificate by the conveyancer in terms of section 15B(3)(a) of the Sectional Titles Act must contain the following information, certified by the conveyancer:
- if transfer will result in the establishment of the body corporate, that no body corporate is in existence, thus no money is payable; or
- if a body corporate is already in existence, that all money due to the body corporate has been paid or that payment has been secured to the satisfaction of the body corporate; and
- that no real right to extension of the scheme as contemplated by section 25(1) of the Sectional Titles Act has been reserved in favour of the share block company; and
- according to a sworn declaration or affidavit furnished by the share block company, the transferee has paid all the levies due to the company or has been secured to the satisfaction of the share block company; and
- that the share certificate, the signed share transfer form and the written waiver of the occupancy rights have been delivered, as provided for in item 8(3) of Schedule 1 to the Share Blocks Act.
No section 15B(3)(c) affidavit needs to be lodged by the share block company.
This transfer of a unit is regulated not by the Sectional Titles Act, but by the Share Blocks Control Act.
Next week: Transfer of a unit to a non-share block holder
Republished with permission