Sectional Titles

Confusion – a response

In response to Confusion ("the article"), it is noteworthy that, whereas in Registrars' Conference Resolutions ("RCRs") 47/2005 and 60/2008, (i) "lapsed" and "exhausted" mean that "all the phases envisaged have been completed" and "the right has been exhausted" and (ii) "cancelled" means an endorsement showing the latter completion and exhaustion, it is clear from the context of section 25 (6) of the Sectional Titles Act, 1986, ("the STA"), that "lapsed" means the direct opposite of the meaning given to the word in RCR 47/2005 and 60/2008, that is, a right that has not been exercised to the point of registration of the sectional plan of extension, such as a lapse of the right by effluxion of time.

The relevant provision of section 25 (6) of the STA reads: "If no reservation was made by a developer in terms of subsection (1), or if such reservation was made and for any reason has lapsed, the right to extend a scheme including land contemplated in section 26, shall vest in the body corporate……………………"

Incidentally, it is implied in paragraphs (a) and (b) of section 25 (5A) of the STA that a right reserved under section 25 (1) or (6) of the STA becomes fully exercised (or "exhausted") when the sectional plan of extension is registered.

In terms of section 25 (11) (a) and (d) of the STA, when the requirements of section 25 of the STA "and of any other law have been complied with, the registrar shall - (a) register the sectional plan of extension" and "(d) make such entries in his records and endorsements on the certificates of registered sectional title referred to in paragraphs (c), any certificate of real right referred to in subsection (10) (c), and any sectional mortgage bond registered against the certificate of real right, as are necessary to give effect to this section." Therefore, the endorsements must be made simultaneously with the registration of the sectional plan of extension.

Further, I hold the view that section 3 (1) of the STA, read with section 3 (1) (v) of the Deeds Registries Act 47 of 1937 ("the DRA"), require that the relevant records be updated as, and when, the relevant transactions are registered.

I, therefore, agree that the endorsements referred to in sub-sections (10) (d)(A) and (11) (c) of section 25 of the STA and the noting of the lapsing of the real right of extension in terms of section 68 (1) of the DRA must be made when the real right of extension has been fully exhausted, provided that such date is the date of registration of the relevant sectional plan of extension. To this end, in order to obviate the cost and negative impact referred to in the last paragraph of the article, it is recommended that consideration be given to the advisability or otherwise of issuing a Chief Registrar's Circular or the adoption of a RCR, requiring that the aforementioned section 68 (1) application be lodged simultaneously with an application for the registration of the relevant sectional plan of extension.

Since paragraphs (c) and (d(A) of section 25 (10) of the STA require that an application for the registration of a sectional plan of extension be accompanied by the "sectional mortgage bond" and "mortgage bond", respectively, referred to therein, I am unable to agree to the statement in the third paragraph of the article that: "Bonds need not be lodged for endorsement (see RCR 61 of 2008)." In any event, I cannot find anything in RCR 61/2008 about non-lodgement of bonds.

Thabo Nqhome
20 July 2010

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