When can a business be run in a sectional title scheme?
Hi, I live in a sectional title complex with 13 units. A tenant started a business and has staff living in another two units. At the AGM the other owners agreed to allow him to run his business, which I believe is mainly online/internet based. Does the complex need to be rezoned, do we have to declare this to the insurance and will the policy now be converted from residential to commercial? – Shane
Hi Shane, there are numerous factors which must be considered when an owner of a unit in a sectional title scheme wishes to operate a business from their unit.
The legality of the operations will depend on both the body corporate and the city by-laws.
Insofar as the sectional title scheme is concerned, it is clear from the Sectional Titles Schemes Management Act that a flat or townhouse is intended for residential use, and, generally, cannot be used as an office or place of business unless the owners of every other unit in the scheme agree in writing to a change of use.
The legality of home businesses, insofar as by-laws are concerned, is dependent on factors such as what type of business it is, how many people will be working on the premises, and what resources and utilities you’ll be using and to what extent.
Section 13(1)(g) of the Act provides a mechanism for changing the use of a section or exclusive-use area. Acknowledging the importance of the use restrictions, as set out in Section 13(1)(d), the mechanism provided is one of the most onerous of all authorisations in the Act, in that a change of use requires the written consent of all the owners in the scheme. However, the provisions of Section 13(2) go on to say that an owner applying for a change of use may apply to the court for relief if he or she considers the refusal of another member to provide written consent to be unfair or otherwise prejudicial.
The three main factors that are normally considered are: (a) the level of noise emanating from the business operations; (b) the degree of nuisance, insofar as it affects parking, use and enjoyment etc.; and (c) the use of signage which would inadvertently affect the value of the property.
As for the insurance policy, it will be necessary to notify the insurance provider of the change of use within the property as the insurance provider is not obliged to settle a claim if it is not informed or updated of pertinent details such as the property not being used for purposes for which it is intended. In the normal course of events, the business or the business owner (in the case of a sole proprietorship) will be obliged to pay the difference, if the insurance premiums are to be increased. Alternatively, Section 14 of the Act allows for an owner to solely insure his property, at his own accord, against any damage or claim arising from his unit.
The zoning requirements will differ for different municipalities. Some municipal by-laws do not require re-zoning, only the consent of the unit owners, whilst others will require re-zoning even after consent has been granted. A special kind of consent from the Municipality may also be required depending on what zone the property is currently zoned under.
In conclusion, considering that the particular owner has already been granted the necessary consent from the other owners, this obstacle has been overcome, leaving the question of zoning.
The above information is for information purposes only and is based on certain assumptions relating to the existence of certain facts. It is therefore important to seek professional assistance so as to avoid any non-compliance or contravention.
This information and material is provided for general purposes only and does not constitute legal advice. Although we make every effort to offer the most current and accurate information, please consult one of our lawyers or another professional on any specific legal problem or matter. We accept no responsibility for any loss or damage, whether direct or consequential, which may arise from reliance on the information contained here.
Ntobeko Ntuli is a legal intern at Bruno Simão Attorneys