It has been brought to the attention of the Chief Registrar of Deeds that the calculation, as envisaged by section 24(6)(d) of the Sectional Titles Act of 1986, is open to different interpretations.
For the sake of completeness the section is quoted and reads as follows:
24 (6)(d) any sectional mortgage bond to which the section may be subject, together with a certificate by a conveyancer stating that there is not a deviation of more than 10 per cent in the participation quota of any section as a result of the extension, or if there is a deviation of more than 10 per cent, that the mortgagee of each section in the scheme has consented to the registration of the sectional plan of extension of a section; (my underlining).
The interpretation of the 10 percent deviation is best illustrated by the following scenario:
In a scheme where there are ten section having a floor area of 100 square metres each:
The total floor area of the scheme will amount to 1000 square metres, and thus the participation quota of each section is 10%.
Should one of the sections increase its floor area by 50 square metres, resulting in the floor area of its extended section being 150 square metres, the total floor area of the scheme will amount to 1050 square metres.
The calculation is done by the conversion of the deviation to a percentage, e.g: The deviation is 50 square metres, therefore 50/1050 x 100 = 4.762%.
In other words the, the extended section "acquired" 4,762% of the total of the 100% participation quota, proportionately from the other nine sections, resulting in those nine cumulatively "losing" 4.762%.
The deviation in respect of each of the other sections must also be calculated (the subsection refers to "any" section).
The deviation in respect of each of the other sections is calculated as follows:
4.762/9 = 0.529% or
50 sqm/9 sections = 5.555sqm/1050 total sqm x 100 = 0.529%
The deviation in respect of the extended section: 4.762%. While the deviation in respect of each of the other sections: 0.529%.
It is thus clear that the deviation must be calculated in respect of any section, and it is trusted that the above now sheds more clarity on the alleged ambiguity.
Republished with permission from SA Deeds Journal
[Editors note: With regards to the comment below, please see the subsequent changes to the calculation as discussed in the article Increase in floor area]
This method is fundamentally flawed, since it does not calculate the deviation in participation quota of any section. It calculates the increase in floor area of the extended section as a percentage of the total floor area of the scheme, after extension. This is contrary to the wording of section 24(6). The section deals with participation quotas, not floor areas. Percentage change in participation quota for any given section is [(quota after extension - quota before extension) / (quota before extension) ] x 100 ; as for percentage change an any quantity. The fact that you are applying different calculations for different sections further indicates that the method is inconsistent and contrived .
T. Visagie, Professional Land Surveyor, B.Sc Hons (Financial Modelling).
Please take note that this article was written in 2008 and at such time the relevant section referred to any section . The section was amended in 2010 to refer to the relevant section . Trust this clarifies the position.
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