Most young people moving away from their parents’ homes are not able to finance the purchase of a property. They are mostly found renting a property in one of the many townhouse complexes.
Home Insurance and Household Insurance
We would like to discuss, on Insurance Chat, the difference between the types of home ownership and the impact that this has on Insurance. With this in mind we have approached Ashleigh Van Greunen, an expert on sectional ownership, to guide us in a series of posts. We would like to start by clearing a few uncertainties and focus on the difference between Sectional title and Full title:
Sectional Title v Full Title
The question is often asked what the difference is between a sectional title unit and a full title.
Firstly, Sectional Title is a form of land ownership where various owners can own a certain piece of land on which a complex is built and each owner then owns a specific section in this complex, being a flat or townhouse.
The section he owns plus his undivided share in the common property is then called his unit. The section owners collectively own the common property and share all rights and responsibilities such ownership entails.
Full title, on the other hand, is a form of land ownership where an owner owns a certain piece of land, the buildings and other improvements thereon and the owner accepts all rights and responsibilities of the property and does not share this responsibility with anyone.
When buying into sectional title, you become a member of the body corporate. This is a legal entity owning and controlling the common property in the sectional title scheme. The body corporate receives funds from all section owners by means of levies, which are used to pay for the expenses of the sectional title scheme. These expenses include maintenance, utility bills, services, etc. Levies are calculated according to the size of section a person owns and is usually determined by the members of the body corporate.
Why buy into sectional title if the property does not belong to you in totality? Why share with so many other owners and not being able to make decisions regarding your unit and then attending all those meetings?!
Advantages and Disadvantages of Sectional Title
Sectional title has its advantages and disadvantages and we will mention but a few:
• Sectional Title owners share the responsibility in payment of the body corporate’s expenses;
• Costs are lower, as these are shared between all owners and not only one in particular;
• Sectional title units are very popular in the rental market and are usually leased out easily;
Some disadvantages are:
• Owners cannot extend sections without the permission of all the other owners;
• All owners are jointly and separately responsible for any expenses and debts incurred by the body corporate, which means that if someone else does not pay, it becomes your problem too!
• There are always rules to follow;
In conclusion, when deciding to buy into sectional title, remember that you are buying into a “partnership” with other owners and you need to understand exactly what you can use your unit for, and how you can use it, without creating a conflict situation with your neighbours.
We will also, in other posts, focus on sectional title insurance and the responsibilities of trustees.
[A word of appreciation to Ashleigh from Omni Estates]