Perhaps no other aspect of sectional title gives rise to more head-scratching and mix-ups than exclusive-use rights. Many people incorrectly believe that an exclusive-use right is a type of individual ownership, akin to owning a section, whereas, as the term implies, what this right confers is the right of use and enjoyment. Exclusive-use areas (EUAs) remain part of the common property, which means that the body corporate has the final say on what can and cannot be done on and with these areas.
Exclusive-use rights do two things:
* They give an owner or a group of owners the right to use a part of the common property to the exclusion of other owners and residents; and
* They entitle the body corporate to recover from the holder of the exclusive-use right the costs associated with the upkeep of the EUA.
If a sectional title purchase includes an EUA, the first thing you need to establish is what type of exclusive-use right you own, because some exclusive-use rights are more secure (and valuable) than others. The two types are often known by the section of the STA under which they were created.
A section 27 right is a registered right to an area of the common property that has been surveyed and is shown on the sectional plan. Registered exclusive-use rights can be bonded, leased or made subject to servitude rights, as with any real right in immovable property. If you hold a registered exclusive-use right, you have an absolute right that can be enforced against another person by instituting legal proceedings.
Registered exclusive-use rights are transferred or ceded by notarial deed. If an exclusive-use right is shared by a number of owners, an owner wanting to transfer his or her right must obtain the written consent of the other owners.
Registered exclusive-use rights are usually created by the developer of the scheme. However, a body corporate can create registered EUAs by taking a unanimous resolution. These areas must be surveyed and shown on the sectional plan.
A section 27A exclusive-use right is created in terms of the scheme’s rules, either the PMRs or the conduct rules. Remember that the PMRs are amended by a unanimous resolution, whereas the conduct rules are amended by a special resolution; therefore an exclusive-use right created in terms of the management rules is more secure than one created under the conduct rules.
Rights created by the rules are not real rights in immovable property. This type of EUA will not appear on the sectional plan, although it should be shown on a scale plan that is included with the rules that created the EUA. A rule-created exclusive-use right is automatically transferred when the owner of the unit on which the right has been conferred sells his or her unit.
The second thing you need to check is your monthly contribution on the EUA. (Technically, the term “levy” applies only to sections, but most bodies corporate call exclusive-use contributions levies, too.) Whether you hold a section 27 or a section 27A right, you will be required to pay a contribution to the body corporate to offset the expenses associated with maintaining the EUA, including the provision of utilities and the cost of insurance. If the monthly contributions are insufficient to cover the cost of a repair, the body corporate is entitled to call on the owner to make an additional contribution. And this is where problems and ill-feeling can arise …
In theory, the exclusive-use contributions collected from owners should be ring-fenced and used only to repair and maintain their EUAs. In most cases, however, exclusive-use contributions are treated like normal levies and end up in the “pot” of funds that pay for the expenses associated with all of the common property. This may not be a problem if the EUAs consist of a number of similar, relatively low-maintenance areas, such as open parking bays. But an EUA may include a swimming pool, an electrified fence or a garage with an automatic door mechanism, in which case the costs will mount when it’s time for repairs or refurbishment.
You must find out how the body corporate determines the contribution on an EUA, whether all holders of exclusive-use rights pay the same amount, even if their EUAs include substantially different amenities, and whether or not the contribution covers every expense associated with that EUA. If the body corporate doesn’t ring-fence exclusive-use contributions, it is in your interests to keep a record of your contributions from the day you take transfer of the EUA.
The norm with EUAs is for the body corporate (meaning the trustees) to be responsible for maintaining and repairing the area, while the holder of the right is liable for the costs associated with maintaining and repairing the EUA. In sectional-title-speak, “responsible” means “whose problem it is to do the work”, while “liable” is a euphemism for “who must pay the bill”. In the world of sectional title, these two duties are sometimes conferred on different parties.
Responsibility and liability for EUAs is often dealt with in the rules, particularly if the exclusive-use rights were created by the rules. The rules may make an owner directly responsible and liable for his or her EUA, or an owner may be responsible for maintaining the area while still paying a contribution to the body corporate. The important thing is to check the rules and to ask questions of the seller.
Source – https://www.iol.co.za/personal-finance/sectional-title-all-the-ins-and-outs-1858044