Section 25 of the Sectional Titles Act, No. 95 of 1986 (“Sectional Titles Act”) provides developers the opportunity to reserve a real right of extension when opening a sectional title register.
This enables a developer to develop the sectional scheme in phases, as desired or as dictated by market conditions says Mike Collins, Director at Cliffe Dekker Hofmeyr (CDH).
A developer may develop a future phase which could be an additional building or buildings, or a vertical or horizontal extension of an existing building on a specified part of the common property. The developer’s reserved right of extension must be exercised within a specified period, as stipulated in the condition imposed.
“We were consulted by a client who had acquired the real right of extension in an industrial sectional title scheme where he initially planned to develop a further phase on the portion of land over which the Real Right lay” says Collins.
“Our client subsequently decided he would prefer not to be part of the sectional title scheme and instructed us to assist him have the common property land which was subject to the right of extension revert to the land register. Such real right of extension can be cancelled by the developer in terms of section 15B (1)(d) of the Sectional Titles Act. This may be done by way of a bilateral notarial deed of cancellation where a body corporate has already been established”.
Transferring this land
Alienation of this piece of land would need to follow the prescribed format in section 17 of the Sectional Titles Act. This section permits a body corporate to alienate common property or a portion thereof legally and validly.
An application for sub-divisional approval is submitted to the local authority and when approved the conditions of approved are complied with, a land surveyor prepares and lodges the relevant diagram of subdivision with the Surveyor General to obtain the approval for the creation of the new erf from the common property of the sectional title scheme.
The following documents were prepared and lodged with the Deeds Office to facilitate the cancellation of the real right of extension and to create and register the new erf in the name of the client:
- the Certificate of Registered Real Right of Extension and Notarial Deed of Cancellation.
- the newly amended Form H in Annexure I to the regulations of the Sectional Titles Act. It is prescribed that the extending clause needs to follow the format and wording as provided by Form TT in Annexure I to the regulations of the Sectional Titles Act, with the original holding title deed being the title deed of the land on which the register was opened.
- a copy of a unanimous resolution as passed by the body corporate and certified by two trustees thereof.
- a diagram of the land as approved by the Surveyor General.
- all the relevant mortgage bonds, security documents and consents by the relevant parties.
- all the usual prescribed transfer documentation, such as powers of attorney to pass transfer, a transfer duty receipt, and rates clearance.
“The new erf reverted to the conventional Deeds Office Land Register after the client’s deed was registered as a conventional title deed to reflect the reversion of said erf”.
“The Registrar of the Deeds Office is required to notify the Surveyor General and the local municipality of the reversion of land to the conventional land registers” concludes Collins.