Frequently, to the buyer’s disadvantage, upon transfer of a unit in a sectional title scheme the exclusive use areas (EUAs) are not ceded at the same time. This is generally due to an oversight by the estate agent or conveyancer who fails to deal appropriately with the relevant EUAs.
If EUAs are not transferred at the time the section is transferred the legal complications can be costly and arduous.
This common problem was identified by Schindlers’ candidate attorneys Kruger and de Matta in a recent article.
This strikes a familiar chord with David Schaefer, director of the national property management group, Trafalgar. “More frequently EUAs are forgotten during the transfer process and the trustees or the managing agent is left to pick up the pieces. Due to this, we now recommend that a deeds search is done as part of the levy clearance process, verifying what the seller is actually selling to the buyer,” says Schaefer.
He says even estate agents who have a working knowledge of the Sectional Titles Act often fail to verify information given to them by the seller, who may or may not understand the difference between a section and an EUA.
In summary, a section is a part of a building shown on a sectional title plan that can be individually owned. An EUA is an area of the common property reserved for the exclusive use of a particular owner or a limited number of owners, for example a garage, a garden or a balcony.
“This may sound like semantics, but there are important differences between the two and it affects things like maintenance, improvements, levy calculations and, yes, ownership,” says Schaefer.
If EUAs are not transferred at the time the section is transferred the legal complications can be costly and arduous. Kruger and Da Matta refer to Section 27(4) of the Sectional Titles Act, which basically says the right to the EUA would then revert to body corporate, triggering possible legal implications to do with the buying price, any loan finance and, ultimately, ‘fixing’ the problem which would require a unanimous resolution, followed by further legal and deeds office fees.
“It is obviously far simpler to do things right from the outset than to pick up the pieces,” says Schaefer. “Thus, verifying the transaction before issuing a levy clearance certificate protects our clients and ourselves from an expensive and often emotionally fraught alternative.”
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