Real Estate Investor Magazine South Africa March 2016 | Page 44

AQUIRING

Navigating Sectional Title Trusts
Levy Complications in Mixed-use Buildings
BY MICHAEL BAUER

W

hile it is not the norm, there are many
cases where a sectional title development
is not a standard residential building and
has a mixed-use component to it, where there are
commercial units on the ground floor and residential
units above, and in these cases the levy amounts
are sometimes debated amongst the owners in the
different sections because of their different uses.
The commercial component, in all likelihood,
would not form part of the residential component and
would not use the lift or any of the other amenities
in the building, such as the gym or swimming pool,
or even the lift, yet they will be subsidising the
operational and maintenance costs of these because
their participation quota dictates this. In cases such
as these, the commercial owners would probably want
their levies reduced by using a different allocation key,
and this is possible in accordance to section 32 of the
Sectional Titles Act, provided a special resolution is
passed and written consent is given.
Section 32(4) of the STA provides that a developer,
“when submitting an application for the opening of
a sectional title register, or the members of the body
corporate may by special resolution, make rules under
section 35 by which a different value is attached to
the vote of the owner of any section, or the liability
of the owner of any section to make contributions for
the purposes of section 37(1 )(a) or 47(1) is modified:
Provided that where an owner is adversely affected
by such a decision of the body corporate, his written
consent must be obtained”.
The expenses of the sectional title scheme are
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MARCH 2016 SA Real Estate Investor

usually itemised and the different line items in the
levy budget could be allocated, such as security and
maintenance of the building, jointly to those who use
these but the other expenses, such as the maintenance
of the lift, pool and gym, could then be allocated to
the owners of the residential units only.

If a buyer is considering a
purchase in a mixed-use
development, there are
simple questions to ask
From the commercial point of view, there are some
businesses that might attract pests and would need
pest control measures paid for by the commercial
component only. If there is a restaurant below, they
might also use more water and should be charged
accordingly, and their electricity charges would be
higher.
If a buyer is considering a purchase in a mixeduse development, there are simple questions to ask.
Firstly, check what the PQ is for the unit being
bought and how the commercial section differs and,
secondly, find out what the commercial section is
paying towards and what sort of businesses are being
run there.

RESOURCES
www.ihfm.co.za
www.reimag.co.za