The positive changes in the property market have resulted in increased development, which is very welcome, but buyers who are considering sectional title or HOA-run developments should have a list of questions to ask before signing an offer to purchase, says Lanice Steward, managing director of Knight Frank Residential SA.
Buyers in sectional title development will often be able to get 100 percent bonds and the VAT and transfer costs will be included in the purchase price. Not having to pay these costs is a huge saving and buyers can avoid having to pay out large sums of money upfront to transfer a home into their name.
One of the pitfalls could be taking transfer of the property before completion, which will attract interim interest and buyers will have to pay this amount in addition to their current accommodation while waiting for their unit to be completed. Buyers should check if they have an option of taking transfer of the unit only once it is completed, says Steward.
“Another issue is that the unit could differ from what buyers thought they were getting. Purchase agreements often have a clause that allows the developer a certain amount of deviation from the plans without notifying buyers, but buyers can insist that this be changed to read that the developer must notify and discuss the alternatives in the changes that are being made. This could also apply to finishes and fittings, so buyers should ask for samples of tiles or carpeting that were agreed on and brochures or photos of the types of appliances that should be fitted in the unit.”
Steward says it is in buyers’ interest to check the sectional plans and make sure that the numbering of the unit matches up with the section number, as mistakes can sometimes be made.
This seems unlikely, but does happen from time to time, as in a case recently mentioned in a Smith Tabata Buchanan Boyes property law update, Bonthuys and Another v Potgieter and Others, where the unit the buyer thought she was getting was actually owned by someone else.
In this case the Bonthuys couple bought unit 1 in a sectional title scheme, and after registration of transfer, discovered that the unit was occupied by two tenants who had an agreement with a Ms Hall. The Bonthuys couple sought for the tenants to be evicted but Hall opposed the application.
It transpired that Hall had bought unit 5 and the location according to the developer’s plan was unit 5 but some time later, when the Surveyor General prepared the sectional title plan, the numbering of units were changed in error, with the result that the SG’s plan differed from the developer’s plan. The effect of the change to the SG’s plan was that while Hall bought and obtained transfer of the unit described as unit 5 on the developer’s plan and the sale agreement, she was in occupation of and exercised the rights of ownership in respect of unit 1 in the scheme. The number on the door of the unit marked 1 was actually unit 5 on the SG plan and this problem of incorrect numbering had been duplicated throughout.
The buyer, in this case, had to accept the unit that was registered to her, even though it was not the one she wanted, but had she asked to check the maps, the discrepancy might have been picked up earlier.
“Buyers in sectional title schemes or HOA run developments should always ask to see the plans, which the body corporate should be able to supply. In fact, the agent selling the units should have a copy of the plans, so that no mistakes are made in the numbering when filling out an offer to purchase,” she says.
“In many cases buying a unit in a development is beneficial for buyers as they save on maintenance of the surrounding property and levies will cover many extras such as sports facilities and security. Buyers should, however, ask as many questions as possible about the scheme and finances before signing an offer to purchase,” says Steward.
This article “Question to Ask Before Buying Sectional Title Property” was issued by Knight Frank Residential SA.