Is there a need for sectional ownership?

Professor C.G. van der Merwe, the doyen of sectional titles in South Africa, sets out the reasons for introducing sectional ownership into a legal system. He states that these reasons or aims are similar worldwide and mean legislative recognition of the social, economic, and physiological needs of society.

The need and demand for suitable residential accommodation have escalated over the past six decades with rapid urbanisation, with a need for security and affordability driving the escalation.

Prior to the introduction of the Sectional Titles Act 66 of 1971, South African laws did not recognise sectional ownership in a building or parts of a building apart from the ownership of the land on which the building was erected. This was due to the Roman-Dutch law maxim superficies solo credit. G.J. Pienaar explains that this means the owner of a piece of land is also the owner of everything that is permanently attached to the land. The legislation aim was therefore to alleviate the scarcity of housing by creating the possibility of someone buying an apartment or flat instead of renting an apartment or flat in a building.

Another reason for sectional ownership legislation is the optimal use of available land which is, especially in densely populated areas, inordinately expensive and in short supply. This is illustrated by a sectional title scheme in the Strand namely Metropole Plaza. The building was constructed on an erf 1971m² in extent. These could possibly have been subdivided into four plots for the erection of four houses. The building comprises 75 apartments or flats. This means the density is higher and the cost of the land for each apartment is therefore less than conventional housing. The rider hereto is that ownership is brought within the reach of lower-income groups.

Homeownership has a social status that satisfies the psychological need therefore as opposed to renting an apartment or owning shares in a share-block scheme. There is no doubt that Van der Merwe is correct when he says that sectional ownership also realises a sociological goal in that certain people prefer apartment living on account of the closer social life, additional amenities, and security it affords.

He is furthermore of the opinion that the Act was designed to achieve not only sociological but also political stability. One only has to look at the extent of informal housing settlements and the constant protesting by the residents as to service delivery as opposed to structured housing and ownership thereof.

Ownership of an apartment, as opposed to rental, satisfies the need to provide a hedge against inflation. This is self-explanatory. Paying rental only assists in increasing the capital growth for the owner.

Although sectional ownership was initially intended for residential purposes in high-rise buildings or duplex flats, semi-detached houses, and cluster housing, its flexibility allows it to be used for commercial or industrial purposes, or a mixture of all three. Sectional title offices, mini-factories, or warehouses are becoming more common. The provisions of the Act do not distinguish between the various sectional title schemes and apply to all schemes alike i.e. residential, commercial, and industrial.

The 1971 Act was repealed in its entirety by the Sectional Title Act 95 of 1986 which was proclaimed as coming into operation on 1 June 1988. The new Act according to Van der Merwe, while leaving the basic structure and main principles of sectional ownership intact, streamlined registration procedures and introduced several new mechanisms to cope with the demand of modern sectional ownership. One notable introduction was the concept of exclusive use areas, which can be designated on the sectional title plan by the developer or later by the body corporate. These areas can be ceded to owners, thereby creating a real right that is capable of being mortgaged.

2011 marked the next development in sectional title legislation with the creation of distinct pieces of legislation:

1. The Sectional Title Schemes Management Act 8 of 2011 which deleted the management provisions from the Sectional Title Act of 1986 and left the technical registration and survey provisions in the latter Act.
2. The Community Schemes Ombud Services Act 9 of 2011 (CSOS) established the ombud service as a new dispute settlement mechanism for community schemes that also aims to monitor and take custody of the community schemes’ governance documentation.

The updated legislation emphasises the growth and the necessity of governance of the burgeoning sectional ownership industry.

Reference list:

1. CG van der Merwe Sectional Title Share Blocks and Time Sharing Vol 1 Pg 1 – 14
2. CG van der Merwe Pg 1 – 14
3. Promulgated on 30 June 1971 and proclaimed into operation on 30 March 1973
4. CG van der Merwe Pg 1 – 11
5. GJ Pienaar Sectional Title and other fragmented property schemes 2010 Pg 22
6. CG van der Merwe Pg 1 – 15
7. CG van der Merwe Pg 1 – 15
8. CG van der Merwe Pg 1 – 15
9. CG van der Merwe Pg 1 – 16
10. CG van der Merwe Pg 1 – 16
11. CG van der Merwe Pg 1 – 16
12. CG van der Merwe Pg 1 – 16
13. CG van der Merwe Pg 1 – 18
14. CG van der Merwe Pg 1 – 13
15. Sectional Titles Act 95 of 186 Section 27 (1)
16. CG van der Merwe Pg 1 – 13

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