INVESTOR INTELLIGENCE
“ The benefit of buying into a shareblock scheme is that the process of transferring shares and ceding a loan account and use agreement in a shareblock transaction is relatively inexpensive .”
Fortunately there have been no reports to date of any shareholders having to close a shareblock company and vacate a development because they were unable to reach agreement on the rental / purchasing of the underlying land .
Nevertheless , more and more shareblock directors are now suggesting that their shareholders should convert their shares to sectional title ownership . This is quite a complicated process and can be costly . However , owners will not have to pay transfer duty or VAT if the shareblock is converted to a sectional title scheme , and given the drawbacks of shareblock schemes and the long-term benefits of owning an actual section , we believe it is to be recommended .
A shareblock scheme can be converted in its entirety to sectional title if at least 30 % of the owners require the company to apply for the opening of a sectional title register or if the directors of the shareblock company decide to make an application , and the steps to be followed are set out in Schedule 1 of the Shareblocks Control Act . These include :
• Obtaining the consent of the mortgage holder , if there is one , to proceed with the application ;
• Having a set of sectional title plans drawn up by a land surveyor ;
88 NOV 2022 SA Real Estate Investor Magazine