Developer's Obligations to Lessees in Sectional Title Schemes | Legal Articles


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Developer's Obligations to Lessees in Sectional Title Schemes

In South Africa, the Sectional Titles Act 95 of 1986 plays a crucial role in safeguarding the rights of lessees in a proposed sectional title scheme. The Act incorporates the principle of "Huur gaat voor koop" and imposes certain obligations on developers to protect lessees. This article examines these obligations, focusing on the duty of notification and the statutory created right of pre-emption granted to lessees.

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Sectional Titles Act South Africa

When a developer wishes to establish a sectional title scheme on land that has an existing building wholly or partially let for residential purposes, the developer has to comply with Section 4(3) of the Act. This section requires the developer to notify every lessee of the proposed sectional title scheme building of a meeting to be held at least 14 days after the delivery or dispatch of a notice letter, either personally or by registered post. The letter must inform lessees of their rights and provide relevant scheme particulars, including the name and extent of the land, full names and address of the developer, title deed number, description of units, parking spaces, and a land surveyor or engineer's report on the building's physical condition. The letter must also include a certificate of prescribed particulars relating to the scheme.

The Act grants lessees a right of pre-emption, meaning that the developer must offer the occupied unit to the lessee who was entitled to receive the notice letter before offering it to another party. The lessee has 90 days from the receipt of the offer to purchase to accept or refuse the offer. If the offer is refused, the developer may not sell the unit to any other person for a lower price without first offering it to the lessee within 180 days from the refusal. During these periods, the developer may not require the lessee to vacate the premises or increase the rent payable unless the lease agreement makes provision for such an increase.

The Act provides that a developer, or any person who has performed partially or fully in terms of a void contract, shall have a claim against the other party to the extent of such performances. The developer can also claim reasonable compensation for the use of the unit and compensation for any damages caused by the person thereto. The other party may claim interest on any payment made from the date of payment, as well as reasonable compensation for any expenses incurred by him or any improvements.

Non-compliant developers may face criminal sanctions, including a fine of R2,000.00, imprisonment not exceeding 12 months, or both.

The Act aims to protect and secure a lessee's rights by imposing an obligation of notice of the proposed development and by granting a statutory right of pre-emption in favor of the lessee. The intention to protect a lessee's common law rights, as found in the maxim "huur gaat voor koop," is evident.

Van Deventer & Van Deventer Incorporated – Property Attorneys South Africa

As a law firm in South Africa, Van Deventer & Van Deventer Incorporated can provide expert legal advice and guidance on all matters related to the Sectional Titles Act 95 of 1986.

Contact us to find out more.

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