Termination of a Sectional Scheme

The Sectional Titles Act 95 of 1986 provides the following procedures having the effect of the termination of a sectional title scheme:

• Cancellation of the sectional plans by the developer (s 14(6)); 
• Cancellation of the sectional plans by a person other than the developer (s 14(8));
• Alienation and transfer of the whole of the common property (s 17);
• Expropriation of the whole of the common property (s 19);
• Destruction of the buildings (s 48); and
• Dissolution of the body corporate (s 48).

Termination of a sectional scheme among others brings into effect:

• Cessation of separate ownership of sections as shown on the sectional plan.
• Co-ownership (in shares proportionate to the respective quotas of section) of the land comprised in the scheme and shown on the sectional plan, see subsection 3(a). 
• Closure of the sectional title register.
• Cancellation of the sectional title deeds of units, exclusive use areas and real rights of extension.
• Cancellation of the sectional plan.
• Reversion of the land comprised in the scheme to the land register; and
• Revival of the title deed of the land comprised in the scheme or issuance of certificate of registered title in terms of section 43A of the Deeds Registries Act 47 of 1937.

The Registrar of Deeds and the Surveyor General are enjoined by the Act to make necessary notifications, entries and endorsements in their records upon compliance with relevant procedures invoked in the termination of a scheme.

The RCR 41/2015 which provides for the issuance of the certificate of title in the name of the body corporate in respect of the unit registered in the body corporate name contradicts the concept of a sectional scheme development as regulated by the Sectional Title Act:

RCR 41/2015 Section 49-Closure of a scheme
The body corporate is the registered owner of a unit. The scheme is closed in terms of section 49 of Act 95 of 1986. Certificates of Registered Titles are to be issued in the names of the owners of the units according to their participation quota. In whose name must the certificate of registered titles be issued in respect of the unit registered in the body corporate name, i.e. in the name of the body corporate or in the name of the members, i.e. the owners in equal shares? Does the body corporate cease to exist when the scheme is closed?

Resolution
The procedure provided for in section 49 must be applied and the certificate of title must be issued in the name of the body corporate.

The RCR 41/2015 above applies to a legal effect of termination of a sectional scheme on destruction of buildings in terms of section 49 of the Sectional Titles Act 95 of 1986.

The issuance of the certificate of title in the name of the body corporate contradicts the concept of a sectional scheme development as regulated by the sectional Title Act. Who will deal with the undivided share registered in the name of the Body corporate after termination of the sectional scheme in the absence of sectional ownership?

A body corporate cannot exist after termination of the scheme that is cessation of separate ownership of sections as shown on the sectional plan, reversion of the land to the land register and cancellation of the sectional plan. [See Section 49(2) (a) and (3) (c) and section 49(5)].

It is proposed that, where a body corporate is a registered owner of a unit in a scheme, the Participation quota of all sections must be varied because the Body corporate is, in essence, a collective of all unit owners.

The cancellation of all sectional title deeds as contemplated in subsection 4(a) and issuance of certificate of registered title to each of the owners of the units results in contractual capacity challenges in case of dealings with the undivided share registered in the name of the body corporate, since Section 36 (5) of the sectional titles Act provides that the provisions of the Companies Act shall not apply to the body corporate.

A body cannot be liquidated and deregistered in terms of the companies Act.

It is therefore proposed that a legislative intervention must provide for insertion of an express statutory provision for the dissolution of the body corporate in the Sectional Titles Act and variation of the Participation quota of all unit owners.

Nkuba Ngoasheng
Assistant Registrar of Deeds
Johannesburg Deeds Office