Why your sectional title scheme alterations could hamper your sale
Improper alterations in sectional title schemes may result in the loss of home loans being granted by banks to potential buyers. At the very least alterations need the approval of the body corporate and the local authority.
Look at any block of flats and there will be some balconies enclosed to create extra living space. Check any townhouse complex and you’re likely to find some carports converted to storage areas, or drying yards turned into laundries, or patios made into studies or spare bedrooms.
The trouble is, notes Andrew Schaefer, MD of leading national property management company Trafalgar, that whenever such alterations made without the proper approvals, it could become extremely difficult for the owners of these units – and their neighbours – to sell their units in future.
“Many sectional title owners are under the impression that, since they have paid for their units, they can alter them as they like. Others simply take advantage of disinterest on the part of other owners, or inadequate management by the trustees of their scheme, to do as they please.
“Either way, they are wrong, and their actions could cost them and all the other owners in the scheme dearly, since the banks can be very sticky about granting home loans in schemes where any of the units have been improperly altered and the overall appearance is no longer homogenous.”
And, he says, it is too late for owners to start thinking about the haphazard alterations their neighbours may have made when they are on the point of selling their unit and hoping for a quick transfer to their buyer.
“In most instances, the bank will not flatly decline to give the prospective buyer a home loan, but it will make approval subject to the removal of unauthorised changes throughout the scheme, or at the very least their proper approval by the body corporate and local authority.
“In addition, an amended sectional title plan with different participation quotas (PQs) will probably have to be drawn up and approved, so the whole process of putting things right could take many months and could well jeopardise the sale.
“Even in the unlikely event that those owners who made the unauthorised changes in the first place could be persuaded to co-operate fully, there are few buyers who would want such a big question mark hanging over their ability to take transfer.”
Consequently, says Schaefer, it is recommended that all bodies corporate should make “additions and alterations” an agenda item at their AGMs, and that their trustees and managing agents should ensure that owners are all fully aware of the proper procedures for making different kinds of alterations – and the good reasons to follow these.
“For example, it is usually not necessary for an owner to obtain permission for changes or improvements to the inside of a section – but he or she will need to do so if the proposed change could affect the stability of the building, or might constitute an extension of the section by increasing the floor area.
“That is why an owner who wants to enclose a balcony or patio, for example, will first need to check the original sectional title plan to see if the area is included in the floor area of his/ her section, or if it is actually part of the common property.
“In the latter case, the enclosure will constitute an extension, and the owner will need to follow the alteration procedure set out in Section 24 of the Sectional Titles Act. If the area was originally included in the floor area, then the owner will only need permission from the trustees, based on maintaining the harmonious appearance of the whole scheme.”