Types of Properties

Freehold / Full Title Properties
Full title describes the transfer of full ownership rights to the buyer. This means that you own the properties as well as the land it is build on. Examples of full title properties are vacant stands, houses, farms, plots, smallholdings etc.

House
This word describes a normal house with an ERF number.

Cluster House
Cluster houses are houses are a group of houses which usually has limited access and good security. Each house is individually owned and there is no levy to be paid, unlike sectional title.

Smallholding
A property is classified as a smallholding if it is situated in or within a 150 km radius of a built up area, does not exceed 20 hectares and is able to be connected to a local authority water supply or has a borehole.There must be a home on the property and the main source of income must not be from farming on the property. If the smallholding is larger than 8,56 hectares, you will be charged an interest rate of 1.5% above the qualifying home loan rate.

Residential property used for business purposes The property will be regarded as residential property provided that no structural changes are made which may affect its description as a domestic residential property. An interest rate of up to 1.5% above the qualifying home loan rate is applicable if more than half of the house is used for business purposes.

Sectional Title Properties
Sectional Title living is governed by the Sectional Title Act 95 of 1986.When you buy a sectional title townhouse/flat you will have sole ownership of the townhouse/flat, together with joint ownership of the common property. You acquire a section which extends to the mid-point of the outer walls, the lower part of the ceiling and the upper part of the floor. This means that anything outside these borders either belongs to another owner or is common property.

Common property
There is common property in sectional title living such as stairways and lifts, swimming pools, club houses, entrance foyer and outer walls etc. that are there for the use of all the residents. The common property is that part of the complex which does not form part of any section.

Alterations, repairs and maintenance
Permission must be granted by the Body Corporate for any alterations to any part of the common property.

The Body Corporate are responsible for the upkeep of the common property.

However, the maintenance and repair of the hot water system is the responsibility of the owner who the system serves no matter where it is located. If the system serves more than one sections such as is the case with a boiler in some of the older complexes, the repair and maintenance is the responsibility of the Body Corporate.

Exclusive use area
Exclusive use areas are portions of the common property which you do not own, but over which you alone have use. This could include: parking bays, garden, patio, garages and storeroom

The Body Corporate
From the date of the first sale of a sectional title unit, a Body Corporate is instituted for the particular complex. The developer (until all units have been sold) and the other owners become members of the body corporate. As a registered owner you are automatically a member of the body corporate. This means you will be liable for the debt of the Body Corporate, so it is advisable that you study the financial statements of the Body Corporate before you buy such a property.

Trusteeship
Trustees are selected during the first meeting of the Body Corporate. Trustees may not derive any economic benefits from the Body Corporate, because they are trustees of the Body Corporate.

Their responsibilities include the daily running of the complex such as sending out levy accounts, maintenance etc.

Levies
These are normally monthly fees which each owner must pay to the Body Corporate to cover costs incurred. These levies will cover costs such as repairs & maintenance, rates and taxes, insurance premiums, garden services etc. In addition a special levy may be charged in instances where there is a shortfall in funds to improve certain structures.

Full title stands in a security village
If you buy a full title stand in a security village, you will be subject to certain rules and regulations regarding common property. For example: the entrance gates, boundary walls, etc. For the maintenance of these common areas a Section 21 Company (Home Owners Association) is normally incorporated. Each owner automatically becomes a member of the Section 21 Company on the date of transfer and a monthly levy is normally payable by the owners to the Home Owners Association.

If a sectional title complex is situated within a security village, it forms part of it – the development conditions of the Estate normally stipulate that all owners must become members of the Home Owners Association (HOA). The Body Corporate would therefore have to pay the levies that are determined for such an HOA and this amount will have to be included in the monthly levy that each sectional title owner has to pay to the Body Corporate.

Townhouse or flat
Townhouses are properties that are located within a complex. A townhouse of flat unit must be in an approved sectional title complex. The townhouse property can either be a semi consisting of one floor or a duplex which has two floors. The complex must only contain residential units.

Semi detached house
This describes two houses that are attached to one another. They may be on separate stands and bonded individually as ordinary houses. They can also be on one stand and bonded together under one bond. The other alternative is that they are sold as separate units in a sectional title development.

Duet House
This is similar to a semi-detached house, but there are two separate free-standing units on one stand. It could also be two dwelling units attached to one another on one stand. They can be sold under sectional title

For more information on debt consolidation, bonds and other related articles go to www.globalproperty.co.za

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