Destruction of a sectional title scheme: precautionary steps to take

There are several reasons why a landowner or developer may decide to build a new development in the place of an existing sectional title scheme. For example, the existing scheme may be dated and no longer suited to the area. Or the demand for residential units may be very high but the old development is undesirable.

The ins and outs of subject to bond approval clauses

Regardless of the reason, when the decision is taken, the existing sectional title scheme must be ‘destroyed’ as per the requirements of the Sectional Titles Act 95 of 1986 (STA) and the Sectional Title Schemes Management Act 8 of 2011 (STSMA).  

Section 17 of the STSMA requires that a unanimous resolution be passed by a meeting of trustees and owners. The resolution must record the following: 

  1. It was unanimously resolved that in terms of Section 49 of the Sectional Titles Act of 1986 that the building or buildings in the scheme are deemed to be destroyed.
  2. The owners present do hereby unanimously resolve not to rebuild the building or buildings. 
  3. The land shall revert to the land register.
  4. That following the deemed destruction the owners shall cease to be separate owners of sections but shall, subject to the provisions of Section 17(2) of the Sectional Titles Schemes Management Act 8 of 2011, remain co-owners of the land in undivided shares proportionate to the quotas of the respective sections previously owned by them.

This resolution makes it clear that the land in question will revert to the conventional land register – i.e. it is no longer sectional title property – and that all owners shall remain co-owners in undivided shares. Once this resolution has been passed, the relevant deeds registry must be notified of the destruction of this scheme. 

The notification should take the following form: 

TO THE REGISTRAR OF DEEDS

NOTIFICATION UNDER SECTION 17(9) OF THE SECTIONAL TITLES SCHEMES MANAGEMENT ACT, ACT 8 OF 2011

We, JACK AND JILL DANIELS,

In our capacity as Trustees of the Body Corporate of the schemes known as

THE HILL CLIMB COTTAGES

Hereby give notice in terms of Section 17(9) of the Sectional Title Schemes Management Act, No. 8 of 2011 that the buildings are deemed to be destroyed on account of the unanimous resolution dated 1 May 2021 and that the owners have by unanimous resolution resolved not to rebuild the building or buildings.

The following documents must be attached to the notice: 

  • A certified copy of the unanimous resolution of the owners that the buildings are deemed to be destroyed, together with the written consent of the holders of registered sectional mortgage bonds.
  • A certified copy of the unanimous resolution of the owners not to rebuild.

It is important to note that any bondholders (bank) must also provide their consent for the destruction of the scheme. 

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Destruction of a sectional title scheme: precautionary steps to take

There are several reasons why a landowner or developer may decide to build a new development in the place of an existing sectional title scheme. For example, the existing scheme may be dated and no longer suited to the area. Or the demand for residential units may be very high but the old development is undesirable.

The ins and outs of subject to bond approval clauses

Regardless of the reason, when the decision is taken, the existing sectional title scheme must be ‘destroyed’ as per the requirements of the Sectional Titles Act 95 of 1986 (STA) and the Sectional Title Schemes Management Act 8 of 2011 (STSMA).  

Section 17 of the STSMA requires that a unanimous resolution be passed by a meeting of trustees and owners. The resolution must record the following: 

  1. It was unanimously resolved that in terms of Section 49 of the Sectional Titles Act of 1986 that the building or buildings in the scheme are deemed to be destroyed.
  2. The owners present do hereby unanimously resolve not to rebuild the building or buildings. 
  3. The land shall revert to the land register.
  4. That following the deemed destruction the owners shall cease to be separate owners of sections but shall, subject to the provisions of Section 17(2) of the Sectional Titles Schemes Management Act 8 of 2011, remain co-owners of the land in undivided shares proportionate to the quotas of the respective sections previously owned by them.

This resolution makes it clear that the land in question will revert to the conventional land register – i.e. it is no longer sectional title property – and that all owners shall remain co-owners in undivided shares. Once this resolution has been passed, the relevant deeds registry must be notified of the destruction of this scheme. 

The notification should take the following form: 

TO THE REGISTRAR OF DEEDS

NOTIFICATION UNDER SECTION 17(9) OF THE SECTIONAL TITLES SCHEMES MANAGEMENT ACT, ACT 8 OF 2011

We, JACK AND JILL DANIELS,

In our capacity as Trustees of the Body Corporate of the schemes known as

THE HILL CLIMB COTTAGES

Hereby give notice in terms of Section 17(9) of the Sectional Title Schemes Management Act, No. 8 of 2011 that the buildings are deemed to be destroyed on account of the unanimous resolution dated 1 May 2021 and that the owners have by unanimous resolution resolved not to rebuild the building or buildings.

The following documents must be attached to the notice: 

  • A certified copy of the unanimous resolution of the owners that the buildings are deemed to be destroyed, together with the written consent of the holders of registered sectional mortgage bonds.
  • A certified copy of the unanimous resolution of the owners not to rebuild.

It is important to note that any bondholders (bank) must also provide their consent for the destruction of the scheme. 

Follow Snymans on Facebook for more legal information, tips and news about property.