The Sectional Properties Act

The Sectional Properties Act No. of 1997, which came into force on 1^st April 1990. It proveides for the ownership of property horizontally and the common units in those areas being held in common by the owners. The Act was meant to constitutte some sought of guarantee on the titles owned horizontally. The Act was also intended to make sure that from the unit, is created some absolute ownership which is guaranteed by the government. It is for this reaseon that all Sectional properties have to be registered under the Registered Lands Act (RLA). The Act To make commerial viability would be guaranteed to lenders.

Reasons why Lenders Opt for Sectional Properties instead of Sub-lease.

• A sub-lease is dependent on the head title
• Where a sub-lease is pegged on a lease from the governement
• The reversionary interest-not certain whether the sub-lease would be renenwed after the period ended.

A certificate of title, Deed is issued under the Sectional Property. A Sectional Property creates an absolute ownership in the property. The RLA is the only other statute applicable under Sectional properties.

Section 5 states that property registered under any other regime wil automatically be converted to RLA.

It is noteworthy that, to enable an effective management of the Sectional Property as well as the common areas, the Sectional Properties Act also provides for the formation of a body corprate with perpetual succession and a common seal. It is deemed that such body corporate is the equivalent of a company registered under the companies Act, except that the process of incorporating the same does not follow the formalities provided for under the Companies Act.

          The moment you lodge the sectional Plan for registration under section 5, then under section 17 of the SPA, a corporate entity is constituted. The name of the entity will be, The owners of the Sectional Plan No. 180.

The owners and shareholdes of the corporate entity under Section 17 are the unit owners. Section 4 of the Sectional Properties Act provides for the registration of a Society.

SECTIONAL PLAN

A Sectional Plan is aplan that divides a building into two or more units and it is drawn by an architect or a qualified surveyor and subsequently approved by the Local Authority.

A Sectional plan also defines boundaries for each unit as well as the common areas and shows the approximate floor area for each unit. A Sectional plan must not only be signed by the registered proprietor of that land, but must also be registerer (section 4) for it to become effective. Sectional plans are only intended for highrise buildings. The Sectional Plan will lead to registration of the corporate entity.

Section 5 of the Sectional Properties Act provides that, the moment a Sectional Plan of a building is registered, then the register of the land or parcel of land where the building is situate, is closed and a separate register is opened for the individual units which have been described in the Sectional plan.

Note that, the Sectional Plan is not an equivalent of a Deed Plan, but a stand alone document on it’s own.

The common areas are to be owned by the unit owners as tenants in common (Your family will inherit the property) and not as joint tenants (the surviving tenant takes over). The common areas are to be registered as owned by the unit owners as tenants in common upon registration of the Sectional plan, it must be noted. Each individual unit is issued with a Title Deed in the name of the Unit Owner and the Title Deed is known as a Certificate of Sectional Property. Section 20 SPA- stipulates the duties of the Corporate entity. Under Section 2 SPA, to register a Sectional Plan, either the parcel of land must be a Freehold or a Leasehold of not less than 45years.

To terminate a Sectional Property and to ensure the corporate entity is wound up, only the members of the corporate entity can do so by way of a unanimous vote or the court, through a formal court decree, may order the termination of the existence of the Sectional Property under the Sectional Properties Act. It is noteworthy that the Sectional Properties Act is the only statute which provides, Under Sections 46-49, certain basic requrements before an effective Sale Agreement concerning a sale of property (unit) registered under the Sectional Properties Act can be enforced.

For purchasers, the Sectional Properties Act guarantees an absolute ownership in the property.

DIFFERENCES: SUBLEASES AND SECTIONAL PROPERTIES

NO.	SUB-LEASES	SECTIONAL PROPERTIES
1	RLA, LTA,GLA are the substantive laws	Sectional Properties Act, 1987
2	A corporate entity is formed under the Companies Act	Management Company
3	50 years at least	45 years at least
4	No statutory framework exists	A statutory framework exists i.e. Sectional Properties Act, 1987
5	Assignment or Transfer	Transfer
6	No Particular and mandatory Form(s)	Forms are prescribed under the sectional Properties Act
7	Ordinary transfer	Has mandatory provisions to be adhered to
8	Site Plans or Building Plans e.g. for villas	Sectional Plan i.e. for Highrises
		Accountant,architect or lawyer

The 45 years is just a guiding factor, sub leases may be of a lesser term.