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New sectional titles Act brought major changes

Tue, 10 November 2015 17:58
by Villager Reporter
News Flash

As the Sectional Title Act was recently enacted, it brought major changes to the industry with the main aim of doing away with limitations and shortcomings which restricted development, access to land and property in addition to enabling potential buyers to obtain finance from banks easier.

Some material changes in the new act affect transfer by endorsement, provision for free standing units, right to phase development and right of exclusive use areas. The Act also provides for the separate rating of units, the establishment of a regulation board, arbitration and amended the definition of unanimous resolutions.

Nancy McNab, Sales Manager at Bank Windhoek’s Property Division said the new Act provides for individual titles, adding this will also satisfy financial institutions in terms of security of title. The system of individual titles will also bring the registration of Sectional Titles in line with normal land registrations. McNab said the previous Act stipulated that buildings had to be divided into two or more units tied at least with a common wall the size of a standard door.

“The new provision states that at least one of the buildings of a scheme must be divided into two or more sections. The new Act provides for loose standing units, which makes these types of properties more marketable,” she says. 

Though the old Act provided for the right to phase development, such right had to be reserved in the opening of the scheme. “This was not viable, since it was nearly impossible to access finance. The new Act now provides for a Certificate of Registered Real Rights, which makes it possible for the extension of schemes upon adjacent land,” says McNab.

She says previously the right to exclusive use of areas was only possible by amendment and that it could become problematic if a unanimous decision could not be obtained. “The Certificate of Real Rights can be mortgaged. There is now even the possibility of levying those areas.”

SEPARATE RATING OF UNITS

Another welcoming change in the Act is the separate rating of units. In the previous Act, land within the scheme was valued as a whole and the Body Corporate was deemed to be the landowner and became liable for payment of debts.

This resulted in unfair practices where innocent owners were required to pay debts of other owners. “The new Act provides for the separate levying of proportionate rates against each unit,” says McNab 

The establishment of newly composed Regulation Board is also a positive development. This Board will advise the Minister on the making of Regulations and Rules and to propose amendments to such Regulations including the amendment of legislation or any other matter relating to Sectional Titles.

ARBITRATION

In the previous Act no provision was made for any determination of disputes except by way of application to our Courts or instituting legal action. The new Act provides for an arbitration procedure and the appointment of an Arbitrator by the Body Corporate through unanimous resolution.

“This procedure now caters for the expedient solving of any dispute by members of the Body Corporate. This procedure will be far more cost effective and decisions and the finality thereof will be forthcoming in a much shorter period,” added McNab.

The amendment of unanimous resolutions is also welcoming since it provides that a decision taken by 80% of Body Corporate members who are present in person and 80% of members reckoned in value.

“This makes the implementation of decisions more practical and effective. In practice one would usually find that one “stubborn” owner would delay the process. This provision now prevents unnecessary and delayed objections and is to the benefit of the Body Corporate as a whole,” McNab said.