Advertising agencies and the businesses they represent are always looking for prominent locations to erect outdoor signs, billboards, posters and banners, and many sectional title (ST) complexes have large expanses of perimeter wall and roof space that would seem to be great places to do so.
However, says Andrew Schaefer, MD of leading property management company Trafalgar, the outer walls, roofs and perimeter walls of ST schemes all form part of the common property – and the trustees cannot easily allow non-owners or non-tenants to use any of this space, even if they feel it would be financially beneficial to their scheme.
“The trustees of ST schemes often receive requests to sell or rent part of the common property to a cell phone company, satellite TV company, advertising agency or even a neighbouring office complex seeking extra daytime parking for employees or visitors.
“The sums of money offered are also often large enough to boost their budgets so much that they could stabilise or possibly even lower their monthly levies. But the fact is that it is not possible for them to rent any part of the common property without a unanimous resolution by all the owners in the scheme.”
And that, he says, is difficult to achieve. “No matter what the effect on levies might be, many owners will for various reasons object to having the walls or roofs of their scheme covered with advertising signs or billboards, in the same way that many do not want a cell phone mast in their scheme, or the security risk of non-owners being allowed to park there.
“In addition, the Sectional Title Schemes Management Act (STSMA) says that if the owners actually do pass such a resolution, any non-owner or non-tenant wanting to rent part of the common property must be prepared to do so for a period of 10 years or more, or for a shorter period with an option to renew that would take the total lease period to 10 years or more. This may not be an attractive proposition for many advertising agencies or their clients.
“The Act also says that a body corporate may rent out part of the common property such as a parking bay or storage area to an owner or a tenant in the scheme for a period of less than 10 years, but that this lease will automatically terminate if the owner sells his unit or the tenant leaves.”
As for selling any part of the common property, to an advertising agency or a cell phone company for example, Section 12 and Section 17 of the STSMA make it clear that it is not possible to sell or alienate any portion of the common property that will remain part of the complex, says Schaefer.
“And it is only possible for the body corporate to create and sell new exclusive use areas (EUAs) for the use of owners and tenants in the scheme. For example, Section 5(1)(e) of the STSMA says that the body corporate may, once again by unanimous resolution of the owners, request the delineation and cession of exclusive use rights to particular owners in terms of Section27(2) of the Sectional Titles Act.
“Alternatively, Section 10(7) of the STSMA says that a developer or body corporate can make management or conduct rules that confer rights of exclusive use and enjoyment of parts of the common property upon certain owners. These two types of EUA are said to have been created in terms of the rules of the scheme, and they cannot be transferred from the owner to anyone else.”
Another type of EUA can, he says, be created by either the developer or the body corporate, as provided in Section 27(3) of the Sectional Titles Act. These are EUAs that are actually set out on the sectional title plan and are transferred to the owners of the sections to which they are attached by registration of notarial deeds.
“But although these EUAs are registered real rights in immovable property and can be sold, bought, donated, left to an heir, mortgaged or let, their purpose of use is also clearly specified on the sectional plans, and unlikely to allow for the erection of billboards, cell phone masts or even generators.
“Prescribed Management Rule 30(f) also says that the body corporate must take all reasonable steps to ensure that all sections and EUAs are used for their originally stated purpose, with the exception of an owner who can manage to obtain the written consent of every other owner in the complex to a change of use of their section and EUA, in terms of Section 13(1)(g) of the STSMA.
“This is obviously a remote possibility, so trustees who are aiming to raise extra revenue would do better to create new EUAs out of parking garages and storage rooms, for example, and sell them to existing owners in their scheme.”
Issued by the Trafalgar Property Group
For more information contact
Andrew Schaefer on 011 214 5228
Or visit www.trafalgar.co.za
