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Developer's interest

5 April 2012

Introduction
Section 34(3) of the Sectional titles Act 95 of 1986 (the Act) provides for the developer to alienate, in one transaction, his or her interest in the land and the buildings comprised in a scheme. Section 34(3) and (4) of the Act provides as follows in this regard:

“(3) When a developer has in one transaction alienated the whole of his or her interest in the land and the building or buildings comprised in a scheme, or a share in the whole of such interest, to any other person, the registrar shall register the transaction by means of a deed of transfer in the case of units and by means of a bilateral notarial deed of cession in the case of rights reserved under sections 25 and 27.

(4) The registrar shall not register the transfer of a transaction referred to in subsection (3) unless –

(a) there is produced to the registrar a clearance certificate of the local authority that

(i) all rates and moneys due to that local authority in respect of the land concerned have been paid up to and including the day of transfer; or

(ii) in those cases where a law provides for the separate levying of rates in respect of a unit, all such rates due to that local authority in respect of the unit concerned have been paid up to and including the day of transfer; and

(b) there is produced to the registrar a certificate by a conveyancer confirming that, if a body corporate is deemed to have been established in terms of section 36(1), that body corporate has certified that all moneys due to the body corporate by the transferor in respect of the units concerned have been paid or provision for the payment thereof has been made to the satisfaction of the body corporate.”

The effect of a transfer when the developer transfers the whole or a share in his or her interest in the land and buildings
The new owner becomes the successor in title of the developer and will therefore be known as the developer. In view of section 36(1) a body corporate will therefore not be established with this transfer, i.e. if not yet in existence. It must also be kept in mind that when the developer transfers a share in his or her interest in the land and buildings, the new owner will act as co developer. Once the developer has transferred the whole of his or her interest and the ownership of all the sections (units) is held by any person or persons other than the developer, the developer shall cease to have a share or interest in the common property. This will, however, not be the case when the developer is the registered owner of a section 25 right of extension.

When the body corporate has been established, the owners of the units will, together with the developer(s) (in succession), be owners of the relevant sections and undivided shares in the common property and therefore members of the body corporate.

Documents to be submitted to the Registrar of Deeds

  • A deed of transfer in the prescribed Form H. Para 3 of Form H provides for this scenario. The units included in the developer’s interest to be transferred must be listed in separate paragraphs; 
  • Title deeds of all the units concerned; 
  • Title deeds of the exclusive use areas and section 25 right, if applicable; 
  • If exclusive use areas are included in the transaction, a bilateral notarial deed of cession in which the exclusive use areas are listed; 
  • If a real right of extension in terms of section 25 is included in the transaction, a bilateral notarial deed of cession for the whole or part of the section 25 right; 
  • If a part of the section 25 right is to be ceded, a diagram, if not yet depicted on an already approved diagram by the Surveyor General; 
  • A rates clearance certificate in respect of the land in question, or when the units are separately rated, rates clearance certificates for all the units in question – section 34(4)(a)(i) and (ii); 
  • A certificate by a conveyancer confirming that, if the body corporate is established, the body corporate has certified that all moneys due to the body corporate by the transferor in respect of the units in question have been paid up to date of registration, or that provision for the payment thereof has been made to the satisfaction of the body corporate –section 34(4)(b); 
  • A transfer duty receipt or exemption certificate; and ? Other documents usually lodged with a deed of transfer.

A section 10 affidavit will not have to be lodged as the interest of the developer is transferred to his successor in title, i.e. a ‘new’ developer. As mentioned above, if a body corporate is not yet in existence, it will not be established with the deed of transfer and ‘Form W’ must not be lodged.

Allen West
Deeds Training
Pretoria

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