Sectional Title vs H.O.A
SO… HOW DOES SECTIONAL TITLE DIFFER FROM HOMEOWNERS ASSOCIATIONS ?
Sectional title is a legal arrangement in terms of which parts of buildings can be exclusively owned, in conjunction with shared ownership of other parts of the buildings and the land. The Sectional Titles Act, a national statute that applies to the formation and operations of all sectional title developments, also makes provision for ‘exclusive use rights’ in terms of which the owner of a section is granted exclusive use rights, which , in some cases, may be bought and sold with the unit.
The fundamental concept that underlies this title type is an abstract division of buildings into some parts that are owned in undivided shares by all participants (referred to as ‘common property’) and other parts that are exclusively owned (referred to as ‘sections’).
Home owners’ association developments, by contrast, operate on the basis of a combination of direct and indirect conventional ownership. There is no special type of title involved and no national statute that specifically regulates their formation or operations, although the Companies Act applies to those HOAs that are formed as non profit companies.
In a HOA development, each owner obtains a registered title to a conventional property held under a title deed, and described on a registered diagram or general plan (‘kaart en transport’), as with any other conventional land in a South African township.
But in addition, each owner of an individual property in an HOA development is automatically a member of the home owners’ association that is usually the registered owner of the development infrastructure. In this case, each owner has indirect rights to the HOA’s property as well as the other rights and obligations that are associated with that membership.
In a home owners’ association development the infrastructure and any other ‘common parts’ are usually transferred to and registered in the name of the HOA, whereas in sectional title schemes, common property is owned in undivided shares by all the owners of sections and only administered by the body corporate of the scheme.