Author: STONEWOOD Property Management
26 June 2021
CAN YOU SELL YOUR PARKING BAY OR STORE ROOM IN A SECTIONAL TITLE SCHEME?
Parking bays and store rooms can be quite a controversial subject, especially when it comes to a unit being sold of which the owner has had the use of a parking bay or a store room. It is commonly assumed that such a parking bay or store room belongs to the seller and they have the right to sell it with their unit. This is not always the case.
This aspect deserves careful consideration when an owner is selling their unit. If not, there may be a false sense of ownership on the part of the seller along with misrepresentation to the prospective purchaser.
Let’s consider the various scenarios to better understand ownership of these types of areas.
Exclusive use areas
All exclusive use areas (EUA) are classified as common property. It can either be allocated in the scheme rules, or as a real right and registered on the title deed of a specific owner.
If the EUA is allocated in terms of the rules (management rules), the owner does not have an ownership right. In this case, the EUA is explicitly allocated to a specific section in the scheme, regardless of the owner at the time. Upon transfer of the section to another party, the use of the EUA will be ceded to the new owner. This will continue for as long as the rules remain as is.
If the EUA is allocated and registered on the title deed, the seller is allowed to sell the use of the area and determine a price for it together with the section they are selling. When EUAs are allocated in terms of title deeds, the owner of such an area is also allowed to sell EUA area on its own (not together with a section), but only to another registered owner in the same scheme.
Parking bays are seldom registered as sections as this will imply that their levies need to be calculated at the same rate as the sections used for dwelling purposes. Parking bays are generally located in open areas or under cover of a structure and require very little maintenance.
Store rooms, on the other hand, are part of the building and have walls, ceilings, doors and sometimes, windows. It is more likely that these will be registered as sections. Should parking bays or store rooms be registered as sections, the sale thereof will take place in the same way as the sale of a unit.
This also implies that a person who does not own a unit in the scheme can purchase a store room or parking bay in the scheme because it is registered as a section. This is never ideal and provides a good reason for parking bays and store rooms to be allocated as exclusive use areas.
A body corporate is obliged to have a list of all the EUAs in the scheme together with the details of the owners who have rightful use. This becomes very important when an owner, who has the use of an EUA, wants to sell their section and the accompanying EUA.
It will also determine if they can sell it (at a certain value) or if the EUA will merely be ceded to the new owner at no cost to them. Often sellers and estate agents assisting with a sale are not familiar with this aspect of ownership and provide incorrect or false information to potential purchasers. For that reason, understanding how EUAs are allocated or owned is essential for any owner who has the use of an EUA in a sectional title scheme.
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