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The SECTIONAL TITLES Amendment Bill

Amendment Bill aims to clarify grey areas that often cause conflict

The Sectional Titles Amendment Bill, which could have significant implications for the way in which sectional title properties are managed and developed if it is enacted, seeks to address a number of issues that are either not clear or not addressed in the Sectional Titles Act.

For example, if you are about to buy a sectional title property, you should find out whether any special levies are due and, if they are, negotiate with the seller who will be liable for the payment of such levies. However, the Sectional Titles Amendment Bill, which was released for public comment recently, puts paid to this issue. The amendment states that a special levy is payable by the person who owned the unit when the resolution for the special levy was passed.

We hope to see the Bill become an Act by June next year and will only then know exactly which changes have been incorporated,Warmback says.

The issues addressed in the Amendment Bill include:

Unanimous resolutions
Currently, the Sectional Titles Act provides that although a body corporate can approach a court for relief when it has not been able to obtain a unanimous resolution, the powers of the court are limited if the resolution in question adversely affects the proprietary rights of any owner.
In terms of the Amendment Bill, the court will have the discretion to make an equitable ruling.

Extension of a section
Currently, if an owner wishes to extend his or her section, and if the floor area of that section will increase by more than 10 percent, the owner needs the consent of all the bondholders (owners) in the scheme.

Warmback says this can lead to long delays and a considerable increase in costs, particularly if the owner belongs to a large sectional title scheme with many bondholders.

According to the Amendment Bill, if an owner sends, by registered letter, the other bondholders in the scheme a request for objections and they do not respond within 30 days, the bondholders are deemed to have consented to the proposed extension.

Paddock says this amendment could prove problematic.

In practice, I have come across massive section extensions, very often made without any prior permission or consent from owners or bondholders.

When the extension is made within an exclusive-use area, it may not be noticed at all for some time. By the time the trustees and other owners need to address the issue, the building is completed and occupied – often with no building plans, no special resolution by owners and no bondholder consents. It then becomes very difficult to either get the extension removed or legalised,” he says.

Paddock suggests that consents should still be required but only from the bondholders of sections that are affected visually by the extension. He also believes that the Act should specifically prevent owners from commencing with any extensions until all the necessary permissions and consents have been obtained.

Development rights and cost obligations

Currently, developers are entitled, on opening a sectional title register, to determine what contributions they will make towards the costs (such as rates and taxes, insurance, maintenance, electricity and water) associated with the areas in a sectional title scheme they have the right to develop. A developer can even elect to make no contribution at all. This can result in antagonism between a body corporate and the developer.

Warmback says that if the Bill is enacted as proposed, developers who hold development rights in a scheme will be required to contribute towards meeting the costs associated with areas over which they have development rights.

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