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What is an exclusive-use area?

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What is an exclusive-use area?

It is actually just what it says: an area of the common property that is set aside for the exclusive use of one owner of a unit in a building.

Typical of this would be a garden area, a carport or a storeroom.

To qualify as an exclusive-use area (EUA), the part of the common property allocated for the use of individual owners would have to be noted in some way.

In the first Sectional Titles Act (STA) in 1976, body corporates could simply draw up a simple plan and mark the area agreed could be used exclusively by a particular owner.

Parking plans as an example were drawn up and the number of the flat that had been allocated a parking was set out in the parking plan.

“That parking was then mine!”

The problem was that nothing was fixed in stone.

Tenants and owners swapped parking spaces and trustees could just decide to move them around.

What was needed was a way of having permanent allocation of exclusive-use area which could not be changed on a whim.

This is when EUA was developed in a later version of the STA in 1986.

This allowed for exclusive-use areas to be registered in the deeds office and either shown on the sectional title plan or done by a change to the rules.

Personally, I feel that the EUAs should be shown in the sectional title plans as this is where you look for details of units.

It is also a much more accurate way of showing it drawn up by a land surveyor (or architect in those days).

It is also a public document which can be accessed from the Land Surveyors site.

Doing it in the rules is far less easy to obtain.

Rules seldom include EUA plans when you get them and these plans, although allegedly to scale are often so small that it is difficult to accurately know what an EUA is.

The main reason that developers put them into the rules is that it is a far cheaper option that putting it into the sectional plan.

The EUA area plan should show what the area of the exclusive use is and what it is intended to be used for.

For example, a private garden is usually noted as T1 (tuin), a garage a G1, and a store as S1.

Like a unit, an exclusive-use area can only be used for the purpose that it was intended for.

You cannot convert an exclusive-use garden into a carport for example without getting permission from the body corporate and after following the correct procedure.

Note that the trustees cannot give permission for a change of use.

EUAs are supposed to be registered in the Deeds Office and linked to a specific unit.

In our experience this is not always done, or at least not property recorded by the Deeds Office.

We noted this when we obtained the list of transfers directly from the Deeds Office to confirm the EUAs in a large scheme.

Many of the EUAs were not noted on the title deeds of the units that owned them.

When valuing a sectional title unit, the value of these EUAs should be included in the valuation.

Not included EUA parking, for instance, would dramatically alter the valuation of the unit.

On the other hand, including a non-EUA in your valuation would have the opposite effect.

Many buildings, especially those registered before 1980, still cling on to the old way of allocating areas to owners by having a traditional plan.

They are supposed to have a proper accurate plan drawn up and have it registered in the rules or as part of the sectional title plans but seldom do because of the costs involved.

The EUA owner has a right to use their areas exclusively against any other owner in the building.

In the case of a EUA garden for example this area would be for the exclusive use of the unit that it is tied to.

What can it be used for?

Well, anything that you would normally use a garden for which would include having a lawn, growing flowers or vegetables, having a braai, allowing kids to play and the like.

But you still cannot make alterations without permission of the body corporate, because the rules that no alterations may be made to the common property without their permission still stands.

So, you have no right to put in a swimming pool and have to follow the normal rules for applying for permission to do so.

The holder of the EUA is also responsible for its upkeep-not the body corporate.

So, they must cut the grass and sweep the leaves and maintain the tap and the like.

It can get a bit confusing because are they also responsible for the painting of the outside of the building that forms the back wall of their EUA area?

Personally, I think that you have to consider normal items to remain the responsibility of the body corporate – what about parking lines in the basement parking which would be part of an EUA area?

The EUA holder is responsible for any expenses occurring in relation to the EUA.

So, insurance of the area, repairs and maintenance, cleaning and certainly electricity water and security should be paid by the owner of the EUA.

This is sometimes difficult to allocate (lighting in the basement garage) so the Act envisages that each EUA is allocated an additional levy over and above the unit levy, which is sufficient to cover the costs of maintaining that area including where there is no electricity or water meter a reasonable amount to cover the cost of their use by this EUA owner.

Remember this is not rent for use of a EUA but to cover the costs of maintaining this area.

When selling a sectional title unit, it is important to include any EUA areas especially so that the buyer knows which EUA is included in the sale of a unit.

For example, selling a flat must include that sale of the EUA for the two parking bays in the basement.

Can an EUA be sold independent to a unit?

An EUA can be sold between unit owners so that the one owner gains use of the area covered by the EUA but nobody can own an EUA if they do not own a unit in the building.

EUAs are always attached to a unit in the building.

EUAs are taken into account in the value of a unit and are used by banks when valuing sectional title units.

Remember it is a registered real right and has value.

  • Mike Spencer is the founder and owner of Platinum Global. He is also a professional associated property valuer and consultant with work across the country as well as Eastern Europe and Australia.

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Property

City properties need a touch-up to remain attractive

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DILAPIDATED PROPERTIES . . . Older buildings built before the 1980s are in many cases in need of major upgrades

It is apparent that there are more and more buildings, especially in Bloemfontein’s central areas, that are standing vacant and are in a very poor state of repair.

Why is this?

Some of these properties are commercial properties and all buildings have a life cycle.

When new they are effective and efficient but they age physically and socially over the years.

A modern office building is designed very differently from the one that was built in the 1930s.

Young people probably won’t understand how different the working environment was just 30-40 years ago.

At that time there were no computers, no photo copy machines, no fax machines and no cellphones.

Everything was manual – making copies was done by adding extra pages into a manual typewriter with carbon paper inbetween.

Transportation was also very different.

Yes, there were cars but most people did not have one and travelled to work by public transport.

Thus, buildings had little or no parking.

The old UBS building on the corner of Hoffman Square and the mall in Bloemfontein is a 6000-square-metre six-storey building with only 20 basement parking bays.

The Cuthbert’s building opposite has none!

Such buildings have no attraction to modern businesses and are relegated to third-class status.

Having lower incomes, they are marginal properties that are not well maintained and, in many cases, do not generate any net profit income at all.

No wonder they are in the condition that they are in, especially as they can only attract the lowest and poorest class of tenant.

In reality many areas in town should be demolished and regenerated as modern areas to attract business back.

Having said that, the lack of control and enforcement of rules and regulations by council is to blame for many of the woes of city properties.

How can an active council allow buildings to stand in a semi-demolished condition without chasing the owner to fix them up?

Uncollected rubbish, unfixed lights and robots and potholes all tend to diminish the desirability of an area, resulting in lower rentals and a greater problem of deteriorated buildings.

We are now seeing similar problems with some residential buildings.

This is not usually in single residential buildings as when the area gets cheap enough, there appears a type of buyer that can afford to buy up these dilapidated buildings and improve them.

Wilgehof is a great example of this happening.

Built in the 1950s by the Department of Community Development, it used to be an area for poor people but because of its central position and new developments such as Saratoga, the area has grown in stature and improved immensely in condition.

This cannot be said of other areas such as Willows, where lawlessness is rife because of lack of enforcement by the metro.

This is one of the least safe areas in the city and nearly all the family occupants have moved away.

Sectional title legislation also has not made it easy to maintain some older sectional title blocks.

These are community living units with multiple owners.

Older buildings built before the 1980s are in many cases in need of major upgrades, including rewiring and modern electrical connections as well as replumbing of old rusted piping.

But owners have different reasons for owning these properties and there are often conflicts of interest.

One owner living there wants the building to be maintained to a high standard while a landlord owner is looking at the return he obtains and wants the levies as low as possible.

Most owners object to what is perceived as high levies which are necessary to collect enough reserves to be able to tackle these problems resulting in a continuous deterioration in the condition of these buildings.

Current law that makes it near impossible to chase owners who do not pay levies and tenants that do not pay rental and service fees just makes the situation worse.

Again, the difficulty in getting rid of bad tenants such as drug pushers kills most of these buildings.

The current state of the economy does little to make things better.

The high level of rates and taxes and lack of services tends to make it unprofitable for landlords and COVID-19 has reduced the demand for commercial properties.

Theft and vandalism in vacant buildings is a major problem that, combined with low demand, has resulted in many dilapidated buildings around town.

There is no easy solution but it would help if much of the red tape and bias was removed from the property industry.

  • Mike Spencer is the founder and owner of Platinum Global. He is also a professional associated property valuer and consultant with work across the country as well as Eastern Europe and Australia.

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Property

Brain drain threatens property industry

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SECTOR NOT SPARED . . . South Africa is losing potential property buyers through emigration

South Africa is faced with a potentially damaging brain involving both newly qualified and experienced professionals across different disciplines.

I will not limit this topic to professionals in the property industry only because whatever happens in one sector has a direct impact on all matters property.

I will explain briefly: if a teacher, medical doctor, artisan or engineer decide to seek greener pastures abroad, it means the property sector has lost some potential customers who were either going to rent at some point or buy their own property.

Of course, some might decide to invest back home, but that possibility is not always guaranteed.

We have also seen professionals in the property industry such as architects, estate agents and quantity surveyors leaving the country, thereby directly impacting on the work done in the sector.

Practically, every time the economy gets tough it is natural for skilled professionals to look for more active areas to live and work in.

This might mean moving to the Cape from the interior because it is perceived that the government of these areas is better as are the opportunities for these professionals.

Artificial barriers to employment for these professionals can result in them seeing opportunities overseas that are not available to them here.

This is what is happening now, and has been happening for some time.

Highly skilled professionals are moving overseas in the search of better opportunities.

Typical of this would be my son who has an accounting degree and another one in internal auditing.

He is a determined and hard-working professional.

Notwithstanding that he can be seen as being at the top of his profession, he found himself being bypassed by less qualified and experienced people here.

The result was that he was required to do the job for his boss.

He eventually went overseas and has gained far higher and well-paid positions because of his abilities – at a total loss to the South African economy.

This is happening in every sphere of professionalism here, especially among the younger family generation.

Political interference, such as state capture, is also resulting in highly qualified black professionals seeing their future overseas.

America and Europe as well as Australia and New Zealand welcome these well-trained and ambitious people with open arms.

They are seen as hard working and innovative people.

It is amazing how many of these South Africans rise to the top of their professions.

Just think how much Elon Musk would have contributed working in South Africa today.

How can this emigration be stopped?

The answer is simple: just make it attractive for these people to stay.

Get rid of the Broad-Based Black Economic Empowerment and allow promotion on merit.

How can you select doctors on colour and not on their academic results?

Taking a person with C grades against one with A grades just does not make sense.

We need to do away with biased allocation of tenders – get rid of racial undertones and appoint people on their ability to do the job.

A huge problem is going to occur is when the current older generation of professionals retire.

Few new property valuers are coming through because it is a profession that requires a high level of understanding of building processes and detailed comparisons of past data.

Schooling is simply not orientated towards creating administrators and professionals and South Africa is going to see a dearth of professionals over the next few years.

  • Mike Spencer is the founder and owner of Platinum Global. He is also a professional associated property valuer and consultant with work across the country as well as Eastern Europe and Australia.

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Property

Thoroughly inspect the property before buying

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I recently wrote about the new law making it compulsory for sellers to make a declaration about the condition of the property they are putting on the market so that the buyer is fully aware of its condition including faults that may need to be fixed.

I am told there is a Gauteng family that bought a house at an auction only to find it occupied by “illegal tenants” who did not want to move out.

I have been asked discuss how this can be avoided or addressed.

My advice is simple: sellers should declare what they know about the property and they should draw up a contract that makes it clear that the buyer is buying a property that he/she has seen and done the necessary investigations on their own.

The new law regarding seller declarations has only just come into force and it’s not surprising some people could be facing challenges when buying property and don’t know how the new law could assist them.

To begin with, the new law means that the seller is required to declare any faults or condition of the building that is being sold or those that he should reasonably be aware of.

Remember sellers seldom have the skills necessary to know whether or not there were, for example, problems with the foundations unless these had caused problems in the past.

In my opinion, this is yet another piece of legislation that gives more rights to purchasers than they should have.

While I am happy that sellers should indicate any serious problems that they were aware of or should have been aware of, it should also be a requirement that a buyer should understand that they are not buying a new property and should take reasonable care to know what they are buying.

This includes the physical state of the building and anything else that could be going on at the property.

It has always been the case that a seller could never deliberately hide problems – for example, cover over serious dampness with a bookcase or not let a buyer know about roof leaks.

But, in my opinion, it is simply making it more difficult to contract freely.

On the other hand, buyers should carefully look at properties that they are considering buying.

Nobody can expect them to climb into roof spaces and again buyers cannot be considered experts in buildings.

Normally serious problems would be visible from the inside or outside of a property.

Both sellers and buyers should look carefully to see that water flows properly and that there are no serious problems with the building on the market.

They should also remember that not every small defect is a problem.

I have lived in my house for over 45 years.

Is it perfect?

No.

But those small problems – little cracks or a solar system that trips if there is especially heavy rain are not serious problems.

Bottom line: one is buying a second-hand product and not a new one.

It is therefore important to thoroughly inspect it and be sure about its availability before entering into or concluding any purchase agreement.

  • Mike Spencer is the founder and owner of Platinum Global. He is also a professional associated property valuer and consultant with work across the country as well as Eastern Europe and Australia.

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