Author: STONEWOOD Property Management
27 July 2021
HOW TO GO ABOUT CONSOLIDATING SECTIONS IN A SECTIONAL TITLE SCHEME
Owners in a sectional title scheme who own more than one unit next to, or above, each other can opt to have their sections consolidated into one. While this is not a complicated process, it does need to comply with a few regulations of the Sectional Title Act.
Why consolidate two sections?
The consolidation of sections is normally determined by two factors – the units being occupied by the owner or owned as an investment.
If an owner has purchased two sections next to each other as an investment, they may choose not to consolidate the sections as this offers them the opportunity to maximize their rental income. If such an owner had to consolidate their sections, it may well produce a lower return than when keeping the sections separate. Unless it is proven that a bigger unit in that particular complex will offer a better return, it does not make sense to consolidate.
Where an owner lives in one or both of their units, it may be worthwhile to consolidate the two sections into one larger section as it will result in a larger living area and improved comfort levels for the occupant. In this case, the return on investment is not reliant on the rental income but on the capital gain when selling the unit. Be mindful that consolidating sections would normally require extensive renovations to create a more suitable layout.
Legislative requirements for consolidation
For an owner to consolidate sections they need the written permission from the trustees. This permission may not unreasonably be withheld. The owner will need to engage the services of a land surveyor to prepare amendments to the scheme sectional title plans. Once this has been done, the land surveyor will submit the amended plans to the Surveyor-General for approval.
During this process, the land surveyor will be required to provide the Surveyor-General with documentation and a certificate stating that the consolidation of sections does not contravene any implied restrictions on the scheme.
Only once the Surveyor-General is satisfied with the submitted plans and the required documentation will they approve the consolidation of the sections.
What happens after the consolidation of sections?
The land surveyor will need to prepare an amended sectional title plan where the section numbers of the units that will be consolidated fall away and a new section number will be assigned to the newly consolidated section.
The managing agent plays an important role here. They are responsible for amending the scheme’s records to show the new section with its updated participation quota and related levy payable. As this is a consolidation of sections the scheme participation quotas will not change. The consolidated sections’ respective participation quotas will merely be added together to give the same result.
While there are some advantages and disadvantages to consolidating sections, it remains up to the owner of those sections to make the decision to consolidate their sections or not. The process is not complicated but there will be costs involved for the owner to ensure that the correct procedure is followed before the consolidation will be approved by the Surveyor-General.
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