Sectional Titles

RCR 46/2010 - response

I was most concerned reading the short article - Query about RCR 46/2010. I was not aware of this particular conference resolution and I wonder whether the full impact of this resolution has been considered. The article refers specifically to the question of the costs of the issue of such a certificate but I think that the problem goes much further than this. There is first of all the question of the large amounts which may be due by the owner to the Homeowners Association Company for levies and in many cases for water and electricity as well. In most cases there is a condition in the title deed to the effect of the property may not be transferred unless a certificate is issued by the Homeowners Association Company.

I do realize that there are other cases where there are no such conditions in the title deed and those create other problems as well. I can also accept that the sheriff or trustee or liquidator selling the property can take up the attitude that the amounts that are due to the Homeowners Association Company are due in terms of the contract between the owner and the Company and as such would have to be claimed in the normal way without any preference. This can obviously have drastic consequences for a Homeowners Association which has tried to assist an owner by allowing him to run up a large debit balance and then to pay off on that amount. I think that the only way that the Homeowners Association can cover itself will be to try and find some way of insisting on a deposit by an owner before connecting electricity, where the association has control over the electricity supply.

The matter goes further however in that the Homeowners Association will not be aware of the transfer and the fact that there is a new owner and will not have any details of the new owner and will find it very difficult to enforce the payment of levies by such new owner. The Homeowners Association depends on levies and other payments to be able to maintain the complex and if it is not able to collect levies from an owner, it will not be able to maintain the common property in the complex and all other owners in the complex will suffer as well as bondholders.

I would be interested to have the views of other conveyancers regarding this aspect and possibly also the view of Allen West. I feel that where there is a Title condition which provides for a certificate being obtained, the Registrar should be obliged to insist upon such a certificate before registering transfer. The question as to whether the Homeowners Association or its agent is entitled to refuse to issue such a certificate until amounts have been paid to it, is a totally different aspect, and the liquidator or the creditor concerned would be entitled to take action against the Homeowners Association to have such a certificate issued without payment.

I think that this particular aspect is very important and should be brought to the attention off all persons and institutions involved in the property industry as it could mean that the values of properties could be reduced considerably and the security of bondholders could also be affected. I do feel that the Registrar's conference should reconsider their decision.

I note that the matter was referred to under "sectional title" when it does not actually have anything to do with sectional title - [most convenient section - Ed]. As far as I am aware the position is totally different in a sectional title scheme where, to the best of my knowledge, the matter is covered under the Act and has already been dealt with in the Courts. The Body Corporate in a sectional title scheme is, in my opinion, entitled to insist upon payment of the outstanding amounts before issuing a clearance certificate. This is due to the fact that the sectional titles act specifically makes provision for a clearance being issued.

Kevin Mahon

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