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Share block schemes converted - 2

11 November 2004

Transfer of a unit to a non-share block holder
In terms of section 8(1)(c) of the Share Blocks Control Act 59 of 1980 (hereinafter referred to as the Share Blocks Act) the share block company may alienate (including transfer of units) any immovable property of the company only if authorized to do so by special resolution of a general meeting of the company. Thus, the transfer of a unit to a third party (non-share block holder) must be preceded by a special resolution to such effect taken at a general meeting of the share block company, if transfer is to be passed by the share block company.

The typical deeds and documents to be lodged for registration of such a transaction are:

  • the title deed of the unit (certificate of registered sectional title in favour of the share block company);
  • the sectional deed of transfer in favour of non-share block holder drafted in accordance with the prescribed Form H;
  • all mortgage bonds (if any) over the sectional title scheme; and
  • the written consent by such bondholders to the release of the unit from the operation of the bonds or the cancellation of the bonds (if applicable);
  • the special power of attorney to pass transfer;
  • the transfer duty receipt;
  • a rates clearance certificate for the land if the transfer will result in the establishment of the body corporate; or a rates clearance certificate for the unit if the units are separately rated;
  • the conveyancer's certificate in terms of section 15B(3)(a) of the Sectional Titles Act 95 of 1986 (hereinafter referred to as the Sectional Titles Act); and
  • a sworn affidavit/declaration by the share block company (as if the developer) with regard to the applicability of section 10 to the specific unit, as provided for by section 15B(3)(c) of the Sectional Titles Act;
  • conveyancer's certificate with regard to the special resolution; and
  • other documents prescribed by law.
Conveyancers and deeds examiners should pay special attention to the following:
  • The causa in the deed of transfer (and special power of attorney) will be the same as in the case of the usual sectional transfers of units.
  • The certificate by the conveyancer in terms of section 15B(3)(a) of the Sectional Titles Act must contain the following information, certified by the conveyancer:
    • as at the date of registration of the transfer of the unit;
    • if transfer will result in the establishment of the body corporate, that no body corporate is in existence, thus no money is payable; or
    • if a body corporate is already in existence, that all money due to the body corporate has been paid or that payment has been secured to the satisfaction of the body corporate; and
    • that no real right to extension of the scheme as contemplated by section 25(1) of the Sectional Titles Act has been reserved in favour of the share block company; and
    • according to a sworn declaration/affidavit furnished by the share block company, arrangements have been made to the satisfaction of the share block company for the payment of all costs and the signing of all the documentation referred to in item 8(1)(c) of Schedule 1 to the Share Blocks Act (see item 8(1)(c) of Schedule 1 of the Share Blocks Act).


  • The conveyancer should also lodge another certificate signed by the conveyancer, to the following effect:

    "I, the undersigned _ _ _ _ _ _ _ _ _ _ _ [particulars of conveyancer], conveyancer, hereby certify that the within sale is pursuant to Special Resolution passed in terms of section 8(1)(c) of the Share Blocks Control Act 59 of 1980 and therefore the other provisions of the Act are not applicable.
    _ _ _ _ _ _ _ _ _ _ _ [signature]_ _ _ _ _ _ _ _ _ _ _
    [date]
    Conveyancer"


  • This transfer of a unit is not regulated by the Share Blocks Control Act but by the Sectional Titles Act.

In the final instance it is deemed noteworthy to draw readers' attention to the fact that the Share Blocks Act still refers to the Sectional Titles Act of 1971! Furthermore, the Share Blocks Act neither explicitly provides for the reservation of the right to extension of the sectional title scheme as contemplated by section 25 of the Sectional Titles Act, nor does it provide for the reservation of the right to exclusive use areas provided for in section 27 of the Sectional Titles Act.

Therefore, it remains a debatable point whether a share block company may reserve such rights when applying for the registration of sectional title plans and the opening of a sectional title register when converting a share block scheme to a sectional title scheme.

Republished with permission

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