With this four-part series of articles the reader will have been guided through the intricacies of the procedure to be followed when the common property of a sectional title scheme is to be subdivided.
In Part 1 the reader was introduced to the concept of subdivision of the common property in a sectional title scheme; the basic preparatory steps to be taken for such subdivision; and the deeds and documents to be lodged at the deeds registry for registration thereof.
Part 2 focused on a discussion about the procedure to be followed where the whole or part of a section(s) is registered over the portion of the common property to be transferred.
The focal point of Part 3 is the procedure to be followed where the whole or part of an exclusive use area(s) is registered over the portion of the common property to be transferred.
Where the whole of an exclusive use area is affected by the alienation of a portion of the common property in terms of section 17 of the Sectional Titles Act, such exclusive use area must be cancelled in toto with the written consent of the holder thereof (Section 17(4B)(a)). Usually this cancellation will be done simultaneously with the registration of the transfer of the portion of the common property. If the exclusive use area is encumbered by a registered mortgage bond, the written consent to the disposal of the bond in respect of the exclusive use area must be obtained. The bond may either be cancelled or the exclusive use area may be released from the operation of the bond.
For the cancellation of the whole of the exclusive use area, the following documentation must be lodged:
- the written consent of the holder of the exclusive use area to the cancellation thereof;
- the sectional title deed of the exclusive use area;
- all the sectional mortgage bonds (if any) registered over such exclusive use area together with the consent of the bondholder(s) to the disposal of such sectional mortgage bonds in respect of the affected exclusive use area;
- the title deeds of any registered real rights over the exclusive use area, if any, for cancellation; and
- a transfer duty receipt for the acquisition of the common property.
Where part of an exclusive use area is affected by the alienation of a portion of the common property in terms of section 17 of the Act, such part of the exclusive use area must be cancelled with the written consent of the holder thereof (Section 17(4B)(a)). In this instance the following documentation must be lodged:
- the written consent of the holder of the exclusive use area to the partial cancellation thereof;
- the sectional title deed of the exclusive use area;
- all the sectional mortgage bonds (if any) registered over such exclusive use area together with the consent of the bondholder(s) to the disposal of such sectional mortgage bonds in respect of at least the affected part of the exclusive use area (i.e. the release of that part of the exclusive use area from the operation of the bond, or the cancellation of the bond);
- the title deeds of any other registered real rights over the affected part of the exclusive use area, if any, for cancellation; and
- a transfer duty receipt for the acquisition of the common property.
Usually such cancellation of the exclusive use area or part thereof will be done simultaneously with the registration of the transfer of the portion of the common property. For the transfer of the portion of the common property, the following documentation must be lodged:
- a deed of transfer in the prescribed FORM H in Annexure I to the regulations (Section 17(3));
- a copy of the unanimous resolution, referred to in section 17, certified by two trustees of the body corporate (Section 17(1)), Section 17(2) and CRC 18 of 1997));
- a diagram approved by the Surveyor-General - if the portion of the common property to be alienated has not been demarcated and depicted on an existing diagram approved by the Surveyor-General (Section 17(3)(a) and CRC 18 of 1997);
- all the mortgage bonds over the units and the scheme and related written consents of bondholders as at date of sale in terms of Section 56 and Section 57 of the Deeds Registries Act for disposal in respect of the portion concerned (Section 18; RCR 45 of 2003 and RCR 35 of 2004); and
- all usual prescribed documentation, e.g. a special power of attorney to pass transfer, a transfer duty receipt, rates clearance certificate for the land, usual documentation pertaining to the subdivision of the land, etc.
The correctness of RCR 35 of 2004 is debatable. However, since an elaborated treatise on the acceptably correct interpretation of Section 18 of the Sectional Titles Act falls outside the ambit of this article, the writer concludes with the desire that the discussion preceding the resolution tabled as RCR 25 or 2004 was recorded.
The final part of the series will be dedicated to the procedure to be followed where the Section 25 right to extension of the sectional scheme, or part thereof, is affected by the alienation of the common property.
Republished with permission from SA Deeds Journal
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