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Sectional Titles Amendment Bill Webinar
STBB Legally Speaking
Overview
This webinar provides a detailed overview of the Sectional Titles Amendment Act 13 of 2022, which introduced numerous technical and procedural changes to the existing Sectional Titles Act. The presenters, Lzelle Keielborn and Marina Buitta, explain how these amendments affect various stakeholders, including developers, conveyancers, and owners. Key areas discussed include updated definitions, procedures for amending and cancelling sectional plans, the lapsing of rights of extension, and the regulation of common property alienation and leases. The session also briefly touches upon anticipated changes in the Housing Consumers Protection Bill, which aims to redefine 'developer' and 'home builder' and clarify existing warranties.
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Chapters
- The Sectional Titles Amendment Act 13 of 2022, effective January 5, 2022, introduced 39 or 40 amendments affecting 16 sections of the main Act.
- These amendments are largely technical, focusing on registration procedures, providing clarity, and filling gaps in the existing legislation.
- The amendments impact registration authorities, developers, conveyancers, land surveyors, architects, owners, and to a lesser extent, trustees and managing agents.
- Some amendments integrate provisions from the Deeds Registries Act to reduce cross-referencing.
Understanding these amendments is crucial for all parties involved in sectional title developments and management, as they clarify procedures and address potential legal ambiguities, thereby preventing pitfalls and ensuring smoother operations.
- The definition of 'exclusive use areas' has been expanded to include occupants recognized by law, not just owners.
- This clarifies that tenants or other lawful occupants can use designated exclusive use areas.
- A minor amendment to section 1B adjusted a name reference.
This clarification ensures that the use of exclusive use areas is not restricted solely to owners, acknowledging the rights of lawful occupants and preventing disputes, particularly regarding common property like storerooms.
If a tenant lawfully occupies a unit, they can now use the storeroom designated as an exclusive use area, even if the trustees previously refused access based on the occupant not being the registered owner.
- Section 4 was amended to clarify that developers must answer reasonable questions posed not only by tenants but also by their agents during meetings concerning the sectionalization of existing residential blocks.
- This amendment protects vulnerable tenants, such as the elderly, who may not be legally qualified and wish to have legal representation at these meetings.
- The change ensures that developers cannot refuse to answer questions from a tenant's attorney.
This amendment strengthens consumer protection by ensuring that tenants' rights are adequately represented and addressed during the complex process of sectionalizing existing buildings, preventing developers from evading scrutiny.
A 90-year-old tenant can now send their lawyer to a meeting about sectionalizing their building, and the developer must answer the lawyer's questions, whereas previously they could have refused.
- Amendments to Section 14 enhance the accuracy and rectifiability of registered sectional plans.
- New provisions allow the Registrar and Surveyor General to halt property transfers if errors are discovered in exclusive use areas, mirroring existing powers for errors in sections.
- Section 14.5 now explicitly includes exclusive use areas when advising on necessary alterations to descriptions or extents.
- Section 14.8A clarifies that the procedure for cancelling a sectional plan by court order will follow the rules set out for scheme destruction (Section 49), ensuring consistent procedures.
These changes ensure that registered sectional plans are accurate and that errors, whether in sections or exclusive use areas, can be rectified before transfers occur, protecting purchasers from prejudice and maintaining the integrity of property records.
If a sectional plan incorrectly states a unit is 600 sqm when it's only 60 sqm, or if an exclusive use area is not properly delineated, the Registrar can now stop transfers until the plan is corrected.
- A procedural gap concerning the lapsing of a developer's right to extend a sectional title scheme has been addressed.
- Previously, there was no clear mechanism to officially note the lapsing of this right on the title deed.
- The amendment provides a procedure for the Registrar to note the lapsing on the relevant title deed (certificate of real right or notarial deed of cession) upon application by the developer or body corporate.
- An affidavit is required if the original title deed is unavailable.
This amendment provides certainty and a clear process for formally recording when a developer's right to extend a scheme has expired, preventing confusion and potential disputes for future purchasers or the body corporate.
If a developer's reserved right to build 40 more units expires because the deadline passed without completion, the Registrar can now officially record this lapse on the relevant title documents.
- Amendments to Section 17 clarify procedures for leasing or alienating common property, particularly when sections or exclusive use areas are affected.
- When leasing common property where a section or part of a section exists, the lease must be made subject to the rights of the section owner, holders of real rights (like developers), and exclusive use area holders.
- The amendment prohibits the cancellation of only a portion of an exclusive use area when alienating (selling) common property; the entire exclusive use area must be cancelled.
- When alienating common property where a real right of extension is registered, the transfer cannot be registered unless the real right of extension has been cancelled with the holder's written consent.
These changes provide stronger protection for existing rights holders (owners, developers, exclusive use holders) when common property is leased or sold, ensuring their rights are respected and that partial cancellations of rights are no longer permissible.
If a body corporate decides to lease a portion of common property that includes an exclusive use area, the lease agreement must explicitly state it is subject to the rights of the exclusive use area holder.
- New provisions allow developers to subdivide, consolidate, or extend sections before the body corporate is established, filling a previous legal gap.
- Section 22.1A clarifies that procedures for registering sectional plans of subdivision now apply to developers before body corporate establishment.
- Section 22.2A requires developers to provide an affidavit regarding sales and disclose subdivision plans to purchasers if any units have been sold but not yet registered.
- Deeds of alienation that don't disclose subdivisions are voidable by the acquirer (purchaser).
These amendments grant developers flexibility to adjust plans before selling units, while simultaneously introducing safeguards to protect purchasers from undisclosed changes that could negatively impact their rights or expectations.
A developer who initially planned seven large units can now, before selling any, decide to subdivide them into fourteen smaller units, but must disclose this to any buyer who has already entered into an agreement but not yet registered the transfer.
- The amendments to Section 25 primarily address administrative and procedural aspects of extending sectional title schemes.
- A new provision allows for the replacement of lost documentation related to the extension of schemes upon application to the Registrar.
- Developers are now more clearly obliged to apply for the registration of amended plans upon completion of phases of development or exclusive use areas.
- When a lapsed right of extension vests in the body corporate, its alienation or transfer now requires the written consent of all unit members, mortgagees, and holders of real rights, though consent cannot be unreasonably withheld.
These changes improve the management of scheme extensions by ensuring documentation is replaceable, enforcing timely registration of completed phases, and establishing a clear, albeit stringent, consent process for the body corporate to deal with reserved extension rights.
If the original documents detailing a developer's right to build an additional 50 units are lost, the body corporate can now apply to the Registrar for replacement documents.
- Minor amendments were made to Sections 26, 27, 32, 54, and 55, often for technical or administrative reasons.
- Section 45 now requires two conveyancers to advise the Minister on regulations.
- Section 55 mandates a notice period of at least one month before new regulations under the Act become enforceable, preventing sudden changes.
- The Housing Consumers Protection Bill, expected to become law soon, will repeal the current Act and introduce new definitions for 'developer' and 'home builder', broadening developer liability.
These final points cover essential administrative updates and highlight significant upcoming legislative changes that will redefine responsibilities for developers and builders, emphasizing the need for ongoing awareness of legal frameworks.
The requirement for a one-month notice period before new regulations take effect means that any changes to the rules governing sectional titles will be publicly announced in advance, allowing stakeholders time to adapt.
Key takeaways
- The Sectional Titles Amendment Act 13 of 2022 introduced numerous technical changes to streamline registration processes and clarify existing laws.
- The definition of 'exclusive use areas' now explicitly includes lawful occupants, not just owners.
- Developers must now answer questions from tenants' legal agents during sectionalization meetings.
- The accuracy of sectional plans is better protected, with the Registrar empowered to halt transfers due to errors in exclusive use areas.
- Procedures for noting the lapsing of developer rights to extend schemes and for cancelling sectional plans have been clarified.
- Leasing or alienating common property is now more regulated to protect the rights of existing section owners, developers, and exclusive use area holders.
- Developers can now modify sectional plans (subdivide, consolidate, extend sections) before the body corporate is formed, but with new disclosure requirements to protect purchasers.
- Upcoming legislation, the Housing Consumers Protection Bill, will significantly redefine 'developer' and 'home builder', potentially increasing liability.
Key terms
Sectional Titles Amendment Act 13 of 2022Exclusive Use AreaSectional PlanRegistrar of DeedsSurveyor GeneralRight of Extension (Section 25)Common PropertyBody CorporateAlienationHousing Consumers Protection BillDeveloperHome Builder
Test your understanding
- How has the definition of 'exclusive use area' changed, and what is the practical implication for tenants?
- What new protection is afforded to tenants when a building is being sectionalized, and why is this important?
- Explain how the amendments to Section 14 of the Act improve the accuracy and reliability of registered sectional plans.
- What is the significance of the amendments to Section 17 regarding the leasing or sale of common property, particularly concerning the rights of existing owners and holders of real rights?
- How do the amendments to Sections 21, 22, 23, and 24 provide flexibility for developers while also protecting purchasers?
- What are the key procedural changes introduced by the amendments to Section 25 concerning the extension of schemes and the management of lapsed rights of extension?