With the positive changes in the property market, there has been an increase of development, which is a much welcome change after the dearth of the last few years, but purchasers who are considering buying into a sectional title or HOA run development should have a list of questions to “tick off” before signing an offer to purchase, says Helen Hoekstra, general manager of Atlantic Seaboard Knight Frank SA branch.
Those who are buying a unit in a sectional title development will benefit greatly in that they will often be able to get 100% 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 the buyer can avoid having to pay large sums of money in cash and upfront to transfer a home into his name.
But, what are some of the pitfalls?
One of the pitfalls could be taking transfer of the property before completion, which will attract interim interest and the buyer will have to pay this amount in addition to his current accommodation while waiting for his unit to be completed. Buyers should check if they have an option of taking transfer of the unit only once it is completed, advised Hoekstra.
Another pitfall is that the unit could be different to what the buyer thought he was getting. There will often be a clause in the purchase agreement that allows the developer a certain amount of deviation from the plans without notifying the buyer but the buyer 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 apply to finishes and fittings as well, the buyer could ask for a sample of tile or carpeting that was agreed upon and brochures or photos of the types of appliances that should be fitted into the unit.
It is in the buyer’s interest to check the sectional plan and make sure that the numbering of the unit matches up with the section number, as the numbering of the units can differ and mistakes can be made, warned Hoekstra.
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 purchaser thought she was getting was actually owned by someone else.
In this case the Bonthuys’ 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.
What had happened, it transpired, is 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 1the scheme. The number on the door of the unit marked 1 was actually unit 6 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 plan, which the body corporate should be able to supply. In fact, the agent selling the units should have a copy of this plan, so that no mistakes are made in the numbering when filling out an offer to purchase,” she said.
In many cases buying a unit in a development is beneficial for the buyer in that he saves on maintenance of the surrounding property and his levies will cover many extras such as sports facilities and security. Buyers should, however, ask as many questions as possible regarding the scheme and finances before signing an offer to purchase, said Hoekstra.