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Buying sectional title must-knows

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Buying sectional title must-knows

22 May 2014

 

Estate agents could, but often do not help sectional owners avoid dissatisfaction with their property purchase.

Prospective buyers are ultimately responsible for informing themselves before getting into a situation that makes them unhappy. However, if they do not know that they lack important information, someone should tell them - and who better than the agent who sells them the property?

Of the continuing stream of problems we hear about in sectional title schemes, many, if not most, seem to have their root cause in, well, let’s not use the word 'ignorance' because of its negative connotations, let us say misinformation, or as often, no information at all.

People buy into sectional title schemes having absolutely no idea of the restrictions, obligations and risks involved. Most only know that they have to pay a levy. So they get cross when they get told they can’t keep their pet or install a solar water heater on the roof or that they must pay for the removal of a tree in their exclusive use garden, just because the trustees decided it needs to go.

Yes, the Sectional Titles Act and the scheme’s register and rules of schemes are public documents, and yes again, prospective buyers are ultimately responsible for informing themselves before getting into a situation that makes them unhappy. However, if they do not know that they lack important information, someone should tell them - and who better than the agent who sells them the property?

There are many estate agents who have very little specialised sectional title knowledge. They are not able to explain to prospective buyers what they really need to know in order to make an informed decision about buying sectional title property, let alone buying into a particular scheme. Here are examples of how two owners ended up being unhappy with their purchases. These stories really happened. We will call the agent “Harry”.

Scheme A

The front garden of the duplex and the double parking in front of the garage are registered exclusive use areas, although Harry, the selling agent, didn’t know that. Harry’s boss told him to include parking in the sale document, so in the property description field in the sale document, Harry just wrote ‘Two parking bays’. Luckily, the rights to the bays were registered, so the conveyancer discovered them and prepared the necessary cessions. If she had not, which could well have happened if the exclusive use rights were conferred under the scheme rules, the owner might not have received the rights. As it was, he was unhappy when the trustees made him remove the new shade cloth carports he erected without asking permission because he had no idea that there were any restrictions on his right to improve the area.

Harry should have known to find out about the exclusive use rights, should have completed the offer to purchase document properly to avoid risk to the buyer and should have explained that owners are only allowed to improve their exclusive use areas with trustee consent.

Scheme B


Harry sold this flat to a first-time investor buyer from Mauritius. The buyer’s cousin looked at the flat and communicated directly with the buyer. The only communication between Harry and the buyer was about the offer to purchase that was faxed from Mauritius. The buildings in this scheme are routinely painted every five years and so look clean and well-maintained. The painting is always funded by a special levy, which Harry did not know about and thus did not tell the buyer or his cousin. Less than a year after the transfer went through, a special levy was raised to paint the building. The new owner immediately sold the unit but was forced to pay the special levy, losing a considerable amount of money in the purchase and sale of the property.

Harry should have known about and warned the buyer about the way painting was funded in this scheme. He should have informed the buyer that he would be responsible for paying a special levy and could not get out of paying by selling the unit.

We have heard plenty of complaints about estate agents but we have not personally heard of any estate agent who has been held accountable for this kind of negligence. We have, however, personally heard of proactive, knowledgeable estate agents who are able to generate new and repeat business for themselves because of their reputation for specialised service excellence.

Anton Kelly is the course instructor of the Sectional Title Specialist Estate Agent short course. To join the June presentation of this course or for more information contact Liam on 021 686 3950 or via email

 

 

Author: Anton Kelly - University of Cape Town

Submitted 23 May 14 / Views 5146