YOU SHOULD KNOW ABOUT: SECTION 25 OF THE SECTIONAL TITLES ACT

 

ARE YOU A SECTIONAL TITLE OWNER?

YOU SHOULD KNOW ABOUT: SECTION 25 OF THE SECTIONAL TITLES ACT

A REAL RIGHT OF EXTENSION OF A SCHEME

WHAT IS A REAL RIGHT OF EXTENSION? 

A real right of extension is a registered right to extend a sectional title scheme. The extension may be done by way of the addition of buildings, the horizontal/vertical extension of an existing building or by way of creating exclusive use areas such as a parking bay, store room or garden.

This right of extension is reserved and registered by a developer when the initial sectional title scheme is opened in the Deeds Office. The time period in which the right of extension must be exercised will also be recorded. If the developer fails to affect the extension, the right will lapse due to the expiry of the period for which it was reserved. The real right will also lapse if all the specified extensions have been completed. If the extensions are not completed within the specified time, the developer must firstly cancel the original real right, and bring a new application for the registration of a real right of extension (if a body corporate has not been established). Upon the first transfer of a unit from the developer, a body corporate is deemed to have been established- after this occurrence, the body corporate will need to make the application and not the developer.

IS THE RIGHT TRANSFERRABLE?

Yes! Transfer of this right is executed by way of a notarial deed of cession. 

NB: MUST IT BE DISCLOSED TO THE PURCASER?

Always! A purchaser, who buys a sectional title unit where a real right of extension is registered, must be informed of the registered right by way of disclosure in the agreement of sale. If this is not disclosed in the agreement of sale, the sale is voidable. This means that the purchaser may choose to regard the contract as void due to the non-disclosure, thereby withdrawing from the sale.

The purchaser may also choose to continue with the sale, but he/she will need to sign a consent agreement. The 15B(3) Conveyancer’s certificate, which is lodged in the Deeds Office with every sectional title transfer, needs to specifically state whether there is a real right of extension or not and whether or not it has lapsed.

Estate Agents– Ensure that the right is disclosed when signing an agreement of sale with your client.

WHY IS IT IMPORTANT TO KNOW?

If the registered real right is exercised, and an extension is brought on, the extension will result in the decrease of the common property and as a result thereof, the relative value or “weight” of the owner of a unit’s vote. Furthermore, the erection of additional buildings could potentially obstruct an owner’s view (which could again lessen the value of the unit) or the building process could cause a disturbance to all owners during the months of construction.

Purchasers– Ask the Estate Agent about the right of extension before signing the agreement of sale. 

Tip: The real right of extension will appear as an SK endorsement on your Deeds Office search.

What you do not wish upon yourself, do not extend to others” – Confucius