SUBLEASES &

SECTIONAL
PROPERTIES
 Introduction
• S 54 (3) & (4)LRA registration of sectional
properties shall be as per the Sectional Properties
Act No 27 of 1997
• S 4- Sectional plan to be presented for registration
if it describes 2 or more units
• S 5- after registration of sectional plan, Registrar
closes the register of the parcel and opens a
separate register for each unit and issues a title
deed for each unit. The Titles are deemed to have
been registered under LRA. The titles can be
transferred, leased, charged etc as though held
under LRA
• Common property held by owners of units as
tenants in common as shares proportionate to
the units they own. The ownership of shares is
noted in the register

• The sectional plan can only be registered on a

freehold or leasehold property with a
minimum balance of 45 years reversion
Elements of Sectional Ownership

The section The Common

Property

THE UNIT

The right to
exclusive use of
certain common
property
 Sec 46 - Sale of Residential Unit
• The Purchase Agreement
• By-laws or proposed by-laws
• Any management agreement or proposed
management agreement
• Any recreational agreement
• The lease of the parcel, if applicable, and
certificate of sectional property
• Any charge that affects or proposed charge that
will affect the unit
• The sectional plan or proposed sectional plan
 Sec 47 – Purchase Agreement
“ The Purchaser may, without incurring any
liability for doing so, rescind this agreement
within 10 days of its execution by the parties to
it unless all of the documents required to be
delivered to the Purchaser under Sec 46 of the
SPA, 1987 have been delivered to the Purchaser
not less than 10 days prior to the execution of
this agreement by the parties to it.”
 Corporation
• S 17 SPA- on registration of a sectional plan a corporation under the
name “the owners, Sectional Plan No.....”
• Members of the corporation are the unit owners
• Corporation has perpetual succession and a common seal
• Capable of being sued and suing
• Corporation is regulated in accordance with SPA and its by-laws and
not Companies Act
• Duties of corporation
– Insure property and pay premiums and enforce the insurance contract
– Keep common property in good state of repair
– Comply with any notice or order of local authority or public body
requiring repairs or work on the property
– Control manage and administer the common property
– Creation and enforcement of by-laws
• The corporation is run through a board of management
 Sectional Units Management
• The common property is managed through the
corporation
• The sectional units are managed through a
management agreement
• Sale of unit is by way of purchase agreement and all
documents required to be delivered to purchaser (ie
purchase agreement, by-laws, management,
recreational agreement, lease of parcel and sectional
title, charge(if any) to be delivered 10 days before
execution of agreement
• Developer holds purchase money in trust. 50% payable
on delivery of sectional title to purchaser and balance
upon completion of improvements( s 48 SPA)
Termination of Sectional Property
• S 55 SPA by:
– Unanimous resolution
– Application to court by corporation, owner, a
registered chargee of a unit or purchaser

• Court declares the termination of sectional status

if in the interest of all stakeholders
• The Corporation files a notice with Registrar in
prescribed form who registers the notice, the unit
owners become entitled to the parcel as tenants
in common in shares proportionate to the unit
factors of their respective units.
 Sub- Leases
• Another way of owning flats
• Developer of leasehold or freehold property subleases
the units for a shorter term than the lease and retains
the reversionary interest.
• Management company is incorporated under the
Companies Act to manage the estate. It purchases the
reversionary interest from the developer and the unit
owners are shareholders
• The flat sold must be properly described eg flat no. .....
Built on LR No.....together with ownership of common
areas
• Monthly service charge is collected for payment of rates,
rent, maintenance of the common areas
• Preferred minimum number of years of
enjoyment of unexpired interest is 50 years

• Restrictions:
– No remodelling without consent of the management
company
– Use of flat
– Fixing aerials
– Hanging of washings
– Obstruction at car parks
– Garbage dumping
– Pets
– Assigning, subletting, transfer or any form of parting
with possession without consent of lessor
 Sectional Title –vs- Sublease/Lease
On registration of sectional plan the register of Sublease registered and issuance of titles must
the parcel is closed and separate registers for comply with section 54(5) of LRA in terms of
each unit is opened and title deeds issues geo-referencing

No title issued for common property but upon Title for common property issued and may lead
registration of plan a register is opened for the to duplicity of titles
common property for recording matters such as
schedule of unit owners etc

Common property defined and owned as part Common property not defined and owned by
of the unit in the title unit owners as shareholders in the
management company

Less formalities in the formation of the Management company formed under the
corporate body(on registration of plan). Companies Act. It can be deregistered

Plans used for registration are prescribed Plan not prescribed

SPA protects the purchase process- eg time of No such protection of the purchase process
delivery of agreements, the holding of the
deposit by vendor as stakeholder etc
 Revision Questions
• Nov 2015, Question 8