Sectional Title

How do Home Improvements or Renovations affect your building insurance?

No Comments »Written on March 24th, 2011 by jonckie
Categories: Household, Sectional Title
Tags: , , , ,

We have discussed sectional title and townhouse insurance on this blog. We would also like to focus on building insurance and how improvements and renovations affect building insurance.

Many have decided to rather purchase an old property at a good price than to build a new home. Many of these homes however require attention and are in urgent need of renovations and upgrades.

What do these property owners need to know about insurance when performing these improvements and renovations?

CIA Building Insurance Specialists provides some important insights:

- Many people employ approved building contractors to undertake and manage a renovation project.
- Where a contractor is employed the contractor will traditionally have an Contractors All Risk (CAR) policy in place which would include contract works, Employers Liability, Public Liability, hired plant etc. Please ensure that this cover is in place before commencing with the project.
- Due to the cost savings many people are opting to self-manage renovations.
- Where renovations are self-managed the impact of these alterations on your building insurance cover must be considered.
- In the course of erection and/ or completion, alteration and until final completion of the contract the insured perils under your building insurance will be amended and cover restricted.
- When attempting a DIY project the Insurer should be notified and the restrictions in cover noted.
- An example of an uninsured incident which can occur would be unwittingly drilling through a water pipe whilst installing a new shower, sink or cupboard.
- After renovations, the value of the property will have increased and it is essential that your building sum insured is adjusted to include these improvements.
- Built in kitchens and revamped bathrooms for example form a part of your building sum insured. Upon completion of these projects the sum insured of the entire building must be increased to the new replacement value.
- When dealing with repair and maintenance work to buildings, property owners, body corporate trustees, and managing agents must familiarise themselves with and at all times comply with the Occupational Health.

[Info with recognition to CIA Building Insurance Specialists]

Many homeowners in Bloemfontein may be paying unfair electricity tariffs

3 commentsWritten on March 1st, 2011 by jonckie
Categories: Household, Sectional Title
Tags: , , ,

Have you seen a sudden upward spike in the amount you are paying for electricity lately? Many owners of townhouses and sectional title schemes in Bloemfontein have found that they are paying much more for electricity than in previous years – and this is not the result of the usual price increases and inflationary pressures.

Centlec to be challenged on sudden electricity price increases

Various bodies corporate, sectional title owners and tenants have joined the Association of Corporate Bodies, Owners and Tenants of Residential Sectional Title Schemes to join forces in challenging the local electricity provider Centlec to have the current residential time-of-use tariff structure revised.

During July 2010 Centlec installed time-of-use meters in various residential schemes and these schemes have been billed according to the “Nersa-approved” tariff structure. However, this tariff structure is far more expensive to the consumer as the normal residential tariff which residential units are supposed to pay according to the “Nersa-approved” tariffs. In certain instances consumers are paying in excess of 300% their “normal” utility bill, challenging the statement of Centlec that an average increase less than 30% was implemented.

Various role players in the industry, including bodies corporates, sectional title owners and managing agents have had on-going discussions with Nersa, Eskom and Centlec regarding the time-of-use tariff structure and the unfairness thereof on the sectional title owner and tenant, however, Centlec have indicated that they have no intention of revising the current tariff structure. They have in essence, challenged the members of the Association to have this issue resolved in a court of law.

Tariff structure

In addition to consumers having to pay more per unit for their electricity, in some cases up to R1,76 per unit, they are also obliged to pay a demand charge, as well as an access charge. Normal residential units are only billed a price per unit, with no basic charges and with the maximum charge per unit being R0,85 c, it is clear that the time-of-use tariff is unfair towards certain residential consumers.

In Willows, various schemes occupied by CUT students have been equipped with time-of-use meters, with the effect that students are paying more for their electricity per unit as the normal residential consumer and they are burdened with additional charges. On average a student in a Willows block will currently have to pay approximately R783-20 (excluding basic charges) for 445 units KwH during the winter whereas a normal residential household would be paying approximately R334-00 (based on the inclining block tariff). In light of this example, it is clear that there is a definitive injustice done to the occupants in schemes where the Time-of-Use structure is in use.

Sectional Title Industry suffers most

At this point in time, it seems as though the sectional title industry are being targeted as they are equipped with bulk meters, having to pay one account to the council, leaving the burden of recovery of the individual accounts as well as the burden of dealing with irritated consumers to the owners and managing agents of the schemes. The managing agent or owners managing the scheme have to deal with all the negative aspects of the collection and recovery process and the local council hide behind so called by-laws. The agent/owners have no choice but to pay the bulk account, knowing very well that non-payment will lead to a situation where services will be disconnected.

The newly formed association call on all effected sectional title owners and managing agents to join hands and rectify the discriminatory method of revenue collection.....

We would like to urge home owners to gain a greater awareness on sectional title schemes, how these schemes are managed and how they could save on the cost of living!

[Info from Ashleigh van Greunen, Omni Estates]

Also view:

What and who are trustees of a Sectional Title Scheme?

What is an exclusive use area in a Sectional Title Scheme?

Sectional title Insurance – What does it cover and who is responsible?
What are the differences between sectional title and full title ownership?

What are the Conduct Rules in a Sectional Title Scheme?

3 commentsWritten on February 12th, 2011 by jonckie
Categories: Household, Sectional Title
Tags: , , , ,

Conduct rules - To do or not to do?

Many owners of townhouses will complain about the management or body corporate by saying that “They are too strict” or “There are too many rules”!!

But what are these rules known as Conduct Rules?

Conduct Rules were often referred to as “House Rules” and were usually managed by the Trustees of the Sectional Title Scheme. There was no registration required at the Deeds Office.

Today we refer to them as Conduct Rules which are regulated by the owners in a Sectional Title Scheme and filed at the Deeds Office. Once the Rules are approved by way of Special Resolution by the owners of the Sectional Title Scheme, they must by initialled on each page by two (2) trustees of the Body Corporate and a notification page in terms of Section 35 must be signed. These documents are then filed at the Deeds Office.

Why do we need Conduct Rules?

These Rules exist not only to regulate the behaviour of owners and occupiers on the scheme’s common property, but also their behaviour within their respective sections.

Management Rule 69 of the Sectional Title Act stipulates:

“The provision of these rules and the conduct rules, and the duties of the owner in relation to the use and occupation of sections and common property shall be binding on the owner of any section and any lessee or other occupant of any section, and it shall be the duty of the owner to ensure compliance with the rules by his lessee or occupant, including employees guests and any other member of his family, his lessee or his occupant. “

Therefore, not only is an owner of a section bound by these Rules, but also his tenants, guests, employees and any other person he allows access to the premises, including building contractors.

Are the Conduct Rules the same at all Sectional Title Schemes?

Although the Sectional Title Act provides standard rules as seen in Annexure 9 of the Act, and these Rules apply to a Scheme by default in the absence of Specific Rules registered at the Deeds Office,  it does not mean that all the Rules of all the Schemes are the same.

A developer usually amends these Rules when registering a Scheme at the Deeds Office. Owners of a Scheme also amend their Conduct Rules to fit a particular scheme – therefore these Conduct Rules will nearly always differ!

What do Conduct Rules deal with?

  1. Conduct Rules usually deal with the following:
  2. Animals, reptiles and birds
  3. Refuse disposal
  4. Vehicles
  5. Damage, alterations and additions to common property
  6. Appearance from the outside
  7. Signs and Notices
  8. Littering
  9. Laundry
  10. Dangerous Acts
  11. Letting of Units
  12. Eradication of Pests

[A word of appreciation to Ashleigh from Omni Estates]

Also view:

What and who are trustees of a Sectional Title Scheme?

What is an exclusive use area in a Sectional Title Scheme?

Sectional title Insurance – What does it cover and who is responsible?
What are the differences between sectional title and full title ownership?

What and who are trustees of a Sectional Title Scheme?

1 Comment »Written on February 10th, 2011 by jonckie
Categories: Household, Sectional Title
Tags: , , , , ,

Trustees and the Body Corporate

Many have thought they are the “local policing forum of the scheme”. Others think that the Trustees are merely appointed to discipline occupants of a scheme ensuring that the house rules are correctly followed. In short, Trustees of a Sectional Title Scheme are those persons appointed by the owners of the scheme to look after the finances and the running of the Body Corporate.

When chatting to Trustees, you will most certainly hear that being a trustee of a sectional title scheme is the most unwanted, unworthy and unappreciated job that there ever could be and usually, no compensation is received for all your efforts.

Why should a sectional title scheme appoint trustees?

Each and every Body Corporate has certain financial responsibilities, which would include the payment of the rates and taxes bill, Insurance premiums, maintenance expenses and so forth. These expenses need to be regulated and collected from the individual owners of the units and the payment of the expense bill ensured. Thus, the Scheme appoints Trustees to ensure that the management, administration and controlling of the scheme is done to the benefit of all owners of the scheme and all the financial obligations are met.

Who can be appointed as a Trustee?

  • You do not have to be a owner of a unit in a scheme to be appointed as a Trustee, however, the majority of Trustees of a Scheme must be owners or spouses of owners in the scheme.

How many Trustees should there be in a Sectional Title Scheme?

  • All owners of a Sectional Title Scheme are Trustees of a newly established Body Corporate, with the developer of the scheme being the chairman, until such time as the inaugural meeting is held by the Body Corporate.
  • The Sectional Titles Act states that there should always be a minimum of two (2) trustees in any Sectional Title Scheme.
  • The Act however, does not limit the amount of trustees that can be elected, therefore, it is possible that ALL owners of a scheme can be trustees as well.

How long do Trustees serve as Trustees?

  • A Trustee will hold office from election at one Annual General Meeting until the next Annual General Meeting or until he resigns as trustee or until he is removed from office by the owners at a special general meeting.

I’ll sign off this week with a citation from a British judge in a famous fraud case: “Those who are ignorant will never know that they are being abused”.

[Recognition to Ashleigh from Omni Estates]

Also view:
What is an exclusive use area in a Sectional Title Scheme?

Sectional title Insurance – What does it cover and who is responsible?
What are the differences between sectional title and full title ownership?

What is an exclusive use area in a Sectional Title Scheme?

4 commentsWritten on February 10th, 2011 by jonckie
Categories: Household, Sectional Title
Tags: , , , ,

An exclusive use area in a Sectional Title Scheme means a part of the Body Corporate’s common property which is used exclusively by an owner or owners of sections. These owners are then usually responsible for the upkeep of the exclusive use area and they are also then burdened with a higher levy than he would otherwise have paid to the Body Corporate.

Exclusive use areas can be obtained by either registering a Rule, granting an owner an exclusive use right, This is then referred to as a Section 27 (A) Exclusive Use Right. When applying in accordance to this rule, the following shall apply:

1)      This rule shall not create rights as contemplated in Section 27 (6); (These rights can thus not be held under a mortgage bond)

2)      The rule shall include a layout plan to scale on which the locality of the area is clearly indicated and the purpose for which such area may be used;

3)      This rule shall include a schedule indicating to which Body Corporate Member such part is allocated.

Exclusive use areas can also be granted in terms of Section 27 in which an owner obtains an exclusive use right regarding an area, and this right is transferred to the owner when transfer of the section takes place. These exclusive use rights are normally parking areas, garages and gardens. These rights can  be held under mortgage and can be alienated to another member of the Body Corporate. Cancellation of this exclusive use right is done by registration of a notarial deed of cancellation, with the written consent of the mortgagee of the relevant section. This notarial deed should also include a special resolution of the members of the body corporate.

An owner of an exclusive use right is responsible for keeping the area clean and in a neat condition and may not use this exclusive use area for any other purpose as shall cause a nuisance to any occupier of a section.

Should an owner fail to repair and maintain this exclusive use area, and the Body Corporate has given the owner a thirty (30) day written notice to do so, the Body Corporate, according to Section 44(1)(c) of the Sectional Titles Act, shall be entitled to remedy the owner’s failure and to recover the reasonable costs of doing so from the owner.

[A word of appreciation to Ashleigh from Omni Estates]

Also view:

Sectional title Insurance – What does it cover and who is responsible?
What are the differences between sectional title and full title ownership?

Sectional title Insurance – What does it cover and who is responsible?

1 Comment »Written on February 7th, 2011 by jonckie
Categories: Household, Sectional Title
Tags: , , , , , ,

Do you live in a townhouse and do not know how the house is insured and what is insured?

Property management companies often have to turn away tenants believing that should their unit be broken into, the Body Corporate will claim their missing items from the Body Corporate Insurance. "What does the Insurance policy of the Body Corporate cover then?", I am often asked.

Sectional Title Insurance Explained

Let’s explain it as many other Sectional Title experts have done before:

Imagine holding your unit in your hand and turning it upside down. Everything that falls out whilst hanging upside down will not covered by the Insurance Policy. All that remains in the unit whilst upside down for example, the sanitary ware, the fitted carpets, the walls, in other words, fixtures and fittings of a permanent nature, are in fact covered by the Body Corporate’s Insurance Policy.

It is therefore imperative that occupiers in sectional title units insure their household goods separately to ensure cover should their unit be broken into, or even worse, should fire destroy all their belongings, etc.

Whose duty is it to ensure that the body corporate is adequately insured?

It is the duty of the Trustees to ensure that the Body Corporate is adequately insured. Management Rule 29 states the following regarding what the trustees should insure the building against:

(1)(a)     … the trustees shall take steps to insure the buildings, and all improvements to the common property, to the full replacement value thereof, subject to negotiation of such excess, premiums and insurance rates as in the opinion of the trustees are most beneficial to the owners, against:

(i)            fire, lightning and explosion;

(ii)           riot, civil commotion, strikes, lock-outs, labour disturbances or malicious persons acting on behalf of or in connection with any political organization;

ii)            storm, tempest and flood;

(iv)         earthquake;

(v)          aircraft and other aerial devices or articles dropped there from;

(vi)         bursting or overflowing of water tanks, apparatus or pipes’

(vii)        impact with any of the said buildings or improvements by any road vehicle, horses or cattle;

(viii)       housebreaking or any attempt thereat;

(ix)         loss of occupation or loss of rent in respect of the above risks;

(x)          such other perils or dangers as the trustees or any holder of first mortgage bonds over not less than 25% in number of the units in the scheme, may deem appropriate.

Should the trustees fail to insure the building(s) against the abovementioned items, they would be in breach of their fiduciary duty and could eventually be sued personally for gross negligence. It is therefore imperative that a sectional title insurance expert’s advice be obtained when making decisions on your insurance policy.

Also view:

What are the differences between sectional title and full title ownership?

[Content with recognition to Ashleigh from Omni Estates]

What are the differences between sectional title and full title ownership?

6 commentsWritten on February 5th, 2011 by jonckie
Categories: Household, Sectional Title
Tags: , , ,

Sectional-Title-Insurance

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]

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