As popular as it may be, sectional title ownership remains highly misunderstood in terms of ownership responsibilities and legalities, says Shaun Rademeyer, CEO of MultiNET Home Loans. Due to a number of reasons, including heightened security, affordability and a more communal way of life, sectional title living has been growing in popularity over the last few years or so.

Sectional title living can offer heightened security, affordability, and a communal way of life. However, sectional title ownership comes with a variety of responsibilities and legalities of which property buyers are not always aware.

Every registered property has a Title Deed which sets out the type of property and any restrictions that may apply. The question is often asked what the difference is between a sectional title and a full title.

Freehold or full title describes the transfer of full ownership rights when you own a property, which includes the building and the land it is built on. These kinds of properties include free-standing houses, cluster houses, residential property used for business purposes, and smallholdings.

Sectional title on the other hand, describes separate ownership of units or sections within a complex or development. When you buy into a sectional title complex, you purchase a section or sections and an undivided share of the common property. These are collectively known as units. Sectional title dwellings comprise mini subtype houses, semi-detached houses, townhouses, flats or apartments, and duet houses. Sectional title developments are governed by a Body Corporate.

The Body Corporate is responsible for managing the scheme and taking care of its finances. A managing agent is often appointed to take care of the duties of a Body Corporate, which includes collecting monthly levies, paying the scheme’s insurance premiums, arranging meetings, ensuring compliance with the Sectional Titles Act, and ensuring that the owners and tenants comply with the Body Corporate rules.

Sectional Title is the ownership of units within a complex or development, such as an apartment block or semi-detached homes. The section owners collectively own the common property and share all rights and responsibilities such ownership entails

With regards to Full Title, the owner takes on the entire financial responsibility for the property.  This could mean that maintenance costs are higher; however, Full Title properties have more independence and fewer rules to abide by.  Examples of full title properties are free-standing houses and clusters, even if it is situated in an estate or smallholdings.

There are considerable differences with regards to investing in the two types of properties, herewith the pros and cons to both forms of ownership.

The benefits of sectional title ownership

Security: Living in close proximity to your neighbours, in a more communal environment is perceived by many to be more secure than living on a freehold property. Added to this, most sectional title developments have excellent security around the perimeter and at the entrance of the development, which is all included in the monthly levies. With regards to freehold properties on the other hand, owners are entirely responsible for their own security – they need to pay to secure their own perimeter, and often for an armed response security company to patrol their area.

A fixed monthly cost: Unlike freehold properties, where the owners have to pay for their own home insurance and for the upkeep of the pavement, garden and exterior of their homes, owners of sectional title units pay a monthly levy instead.

The levy includes the following costs – insurance premiums, maintenance of the common property, wages and salaries of cleaners, security and other staff involved in maintaining the common property, as well as any water and electricity required for the common property.

As a result, owners of sectional title units only need to pay for their rates and taxes, the unit’s insurance, the contents of their home, their own private gardens and for their monthly electricity and water consumption. The cost of maintaining pools, tennis courts, communal park areas and clubhouses in the development is shared, which contrasts with freehold property, where the owner is responsible for all costs.

Affordability and communal living: Generally speaking, a sectional title unit within a complex is more affordable than a freehold house. Also, on average, communities living in sectional title schemes boast close-knit communities and far greater interaction with their neighbours when compared to freehold neighbourhoods.

The benefits of freehold ownership

Independence: Unlike full title ownership, where the owner is in complete control and is financially responsible for the property in its entirety, when you invest in a sectional tile scheme you will own part of a scheme, meaning that the owner has invested in and is part of a small community. As a result, they will need to comply with the management rules and conduct rules as laid out by the Body Corporate.

Majority rules: The rules and regulations of any particular complex may change and, unlike freehold property owners, sectional title investor or owners may not be happy with the changes, but won’t have the power to change them in an individual capacity.

Simplicity: The legalities of sectional title ownership elude a great portion of home owners – there are issue pertaining to participation quotas, nominated values, exclusive areas and quorums.

Lack of freedom: Owners of sectional title units do not have the freedom to make improvements to their property. Those who want to renovate, need to get approval from the Body Corporate before they can begin building.

Liable for the debt of the Body Corporate: If you are investing in a sectional title scheme, you will be liable for the debt of the Body Corporate. As such, it is important to deduce if the scheme is being well managed and that the financial statements of the Body Corporate are all in order.

If you are looking at buying or renting in a sectional title complex or development, it is advisable that you check with the respective estate agent or property owner on what rules and regulations may apply. MultiNET Home loans can assist you to buy the best property for you and your family, for more information contact them www.multinethomeloans.co.za | 0861 54 54 44 | Whatsapp 061 537 8778