Deeds Registries Amendment Bill; Sectional Titles Amendment Bill: Departmental briefing

NCOP Land Reform, Environment, Mineral Resources and Energy

18 October 2010
Chairperson: Ms A Qikani (ANC, Eastern Cape)
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Meeting Summary

The Department of Rural Development and Land Reform gave a second briefing to the Committee on the Deeds Registries Amendment Bill and the Sectional Titles Amendment Bill. The Department noted that it had called for submissions on the Bill, and that some of the issues now raised had been discussed earlier in the year. The Department set out and explained each clause in each Bill to the Committee. Members sought clarity on the board members of the Deeds Registries Regulation Board, and in particular why there might be a problem with getting a quorum, and why the Banking Council had suggested the inclusion of experts from that field on the Board. Members asked that the precise impact of the changed wording in certain clauses should be clearly set out.

The Department then set out some of the comments obtained on the bills. Some did not directly relate to the Bill, and were based on misunderstandings, firstly of the nature of the Rules, and secondly of the legal status of the body corporate. Sectional Titles were private property, and in terms of Regulation 30(4), body corporates were free to prescribe how they wished to regulate their own matters. A comment about limiting the number of occupants of each unit was a local government issue. The South African Property Owners’ Association had made submissions substantially similar to those of the Law Society of South Africa, questioning the circumstances in which the body corporate could approach a Court, and the practical steps now proposed for obtaining consent of bond holders to notarial contracts over common property. The Department proposed that consent be required only from those who were bondholders at the time when the notarial contract was signed. The proposals for any owner of land being able to obtain a certificate of registered title for his or her undivided share in a piece of land were explained. Members called for copies of the written responses that the Department would be giving to those making submissions, to ensure that Members were fully apprised of all concerns. 
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Meeting report

Deeds Registries Amendment Bill: Department of Rural Development and Land Reform (DRDLR) briefing
A delegation from the Department of Rural Development and Land Reform (DRDLR or the Department) briefed the Committee again on the Deeds Registries Amendment Bill (DRA Bill) and the Sectional Titles Amendment Bill (STA Bill), setting out the submissions from the public.

Mr George Tsotetsi, Acting Chief Registrar of Deeds and Ms Antoinette Reynolds, Assistant Chief Registrar of Deeds, took the Committee through the Deeds Registries Amendment Bill.

They noted that the Deeds Registries Act No 47 of 1937 governed the registration of deeds. In South Africa, title to land was guaranteed through a system based on juristic foundation and long-standing practices and procedures. The processes of examination, registration, monitoring of standards, keeping a public register, and preservation of records all contributed towards providing security of title that was accepted by the law, financial institutions and the public. The objective of the DRA Bill would be to amend the Act, to substitute certain obsolete expressions and to enhance the application of the Act to conform to current and uniform practices of the Deeds Registries.

Clause 1
The presenters explained that this clarified the powers of the Chief Registrar by defining “supervision” to include the issuing of practice and procedure directives.

Clause 2
This amended Section 3 of the principal Act, and was needed since the promulgation of the Mineral and Petroleum Resources Development Act (MPRDA) had provided for the discontinuation of the registration of mineral rights in a deeds registry. The correct title of “High Court” would be substituted for the old reference to “Supreme Court”.

Clause 2(b) then addressed the current anomaly that at the moment, Registrars of Deeds were not obliged to follow practice and procedure directives issued from time to time by the Chief Registrar of Deeds, which had resulted in different practices and procedures being followed at different deeds registries. The amendment in Clause 2(b) would in future oblige all registrars to comply with directives and thus promote uniformity in all deeds registries.

Clause 3
This clause was intended to amend Section 9 of the principal Act, to allow for appointment of alternate members of the Board to address the quorum conditions, and prevent cancellation of meetings due to a lack of quorum.

Clause 4
Section 17(2) of the principal Act currently provided for the disclosure, in a deed that needed to be lodged for registration record or execution in a deeds registry, of the full names and marital status of a person. This clause proposed an amendment that would require this information to be disclosed in any documents other than deeds, which need to be registered, recorded or executed by a Registrar of Deeds.

Clause 5
Section 34 of the principal Act allowed a joint owner of a piece of land to apply for a certificate of registered title for his or her undivided share in land. The proposed amendment would allow a sole owner to apply for and be issued with a certificate of registered title for any fraction of his or her undivided share of land.

Clause 6
The amendment of the definition of “Master” in this clause was consequential to the change of name of the High Court, as referred to earlier. The amendment of the definition of the “Minister” also updated and reflected the correct title for the current Minister.

Clause 7
Clause 7 contained the short title of the Bill

Sectional Titles Amendment Bill
The presenters noted that the Sectional Titles Act (the principal Act) governed sectional title developments. A sectional title scheme was made up of sections, such as apartments or flats, which would be owned individually, as well as there being shared ownership by the owners of units, of the shared or “common property” areas such as lifts, driveways, corridors and parking areas.

The presenters then outlined the provisions of the Sectional Titles Amendment Bill (the STA Bill).

Clause 1
Clauses 1(a), (b), and (c) of the Bill provided for the amendment of the definition of “developer”, “Minister” and “owner”. Clause 1(a) provided for a developer’s agent or successor in title to act on behalf of a developer in respect of the approval of development schemes.

Clause 1(b) provided for the amendment of the definition of “Minister”, which was necessary in view of the change of the Ministry from the former “Land Affairs” to “Rural Development and Land Reform”.

Clause 1(c) of the Bill provided for the deletion of the reference to the repealed Agricultural Credit Act, No 28 of 1996.

Clause 1(d) of the Bill proposed the amendment of Section 1(3a) of the principal Act to provide that a body corporate could approach the Court in instances where it was unable to obtain a unanimous resolution.

Clause 2
The phrase “the median line of the dividing floor, wall or ceiling”, in Section 5(4) of the principal Act, stipulated the boundary of any section in a sectional title scheme. The amendment of Section 5(5)(a) provided that the median line of a section would pass through the centre of exterior windows, doors and other structures built into the section’s exterior walls, floors, and ceilings. This provided assistance in determinations of this nature.

Clauses 3 and 4
A sectional title register could be opened on more than one piece of land. If any piece of land was hypothecated under a mortgage bond, then the provisions of Section 40(5) of the Act caused confusion, especially with regard to the format and content of the application. Clause 3(a) proposed the amendment of Section 11(3)(d) of the principal Act, to eliminate this confusion.

Sections 11 and 12 of the principal Act provided for the issuing of one certificate of real right of extension/exclusive use areas as reserved by a developer, but that created a problem if the real right of extension was subdivided. Amendments were thus proposed in Clauses 3(a), (b) and Clause 4 to address the problem.

Clause 5
Section 14 of the principal Act made provision for the cancellation of a registered sectional plan only by order of the Court. However, a registered plan could also be cancelled upon the destruction of or damage to buildings, without the necessity of a Court order. Clause 5 would amend the relevant section, to make it clear that a Court order was not necessary for the cancellation of a sectional plan where the property was damaged or destroyed.

Clause 6
Section 15B of the principal Act did not cater for the issuing of a certificate of registered sectional title in respect of a fraction of an undivided share in a unit in sectional titles scheme. Clause 6 of the Bill now provided for the issuing of such certificate.

Clause 7
Section 24 of the principal Act required the consent of every mortgagee if the extension of a section resulted in a deviation of more than 10% in the participation quota of any section. Conveyancers were not in a position to determine a deviation, and therefore encountered difficulties in obtaining such consents. This clause proposed the amendment of Section 24(6)(d) to address the problem.

Clause 8
Section 25 of the principal Act did not provide for the extension of a scheme by the addition of rights to exclusive use only. This extension was only possible where the rights were linked to the extension of a scheme, by the creation of new sections in a scheme. Clauses 8(a), (b), (d), and (h) to (m) attempted to remedy this defect, by making it clear that a scheme could be extended by the addition of exclusive use areas only.

In addition, Section 25 also did not have any mechanism to extend the period of time in which a right of extension must be exercised. Clause 8(b) catered for this extension if there was agreement between the developer and the body corporate. Clause 8(b) and (c) provided for the reservation of a right of extension, in respect of a building, that already existed.

It was necessary to reconcile the provisions of Sections 25(4)(a) and 27(6) of the principal Act with the provisions of the National Credit Act of 2005, since the repeal of the Mutual Building Societies Act No 24 of 1965 and the Building Societies Act No 82 of 1986. Clauses 8(f) and 9(d) addressed this problem.

Clause 9
The amendment of Section 27 of the principal Act was proposed in Clause 9(a). This made it obligatory to register exclusive use of areas on a sectional plan. The amendment of Section 27(4) of the Act, as proposed in Clause 9(b), provided for the vesting of an exclusive use area in the body corporate, free from any mortgage bond, a registered lease, usufruct, habitation or usus.

Clause 10
Section 29(3) of the principal Act provided for the consent of every bondholder, for purposes of the registration of a servitude over land in a sectional title scheme. New bonds were registered on a daily basis, and it was practically impossible to get the consent of bondholders as at the date of execution of such servitude or agreement. Clause 10 sought to amend this wording to achieve practicality.

Clause 11
Section 37 of the principal Act did not oblige a developer to pay attributable costs in respect of areas of common property, subject to future development rights. Clauses 8(e) and 11(a) would address the problem by deleting Section 25(2)(e), and amending Section 37(1)(b) in Clauses.

Clause 11(b) would add a proviso to Section 37(2), to provide clarity on the payment of contributions in cases where ownership of units had changed.

Clause 11(c) confirmed and legalised a situation that had been used for several years, despite the fact that Section 37 of the principal Act had not provided for the levying of special contributions.

Clause 12
The clause provided for the amendment of Section 44 of the principal Act, to include the regulation of use of exclusive areas for purposes shown on the registered sectional plan.

Clause 13
The clause amended Section 54(2) of the principal Act, to reflect the current name of the Law Society of South Africa.

Clause 14 and 15
Sections 60 and 60a of the principal Act contained provisions in respect of savings and transitional provisions that had already lapsed. Clauses 14 and 15 now made provision for the removal of those lapsed provisions.

Clause 16
Clause 16 contained the short title of the Bill.

Discussion: DRA Bill
Mr G Mokgoro (ANC, Northern Cape) wanted clarity on the issue around board members. He wanted to know who the current Board was and who the Banking Council had referred to as suggested experts.

Mr Tsotetsi responded there were five members of the Deeds Registries Regulation Board (DRRB). The Department was unsure about the experts that the Banking Council had referred to, but assumed that the suggestion had been made so the Banking Council could also have representation on the Board, suggesting that it had expertise in this field.

Ms Reynolds added that Section 54 of the Sectional Titles Act had established a Sectional Titles Regulation Board to deal with matters pertaining to sectional titles. There was wide representation on that Board. The Banking Council was a member of that Board, as well as the State’s National Agency of Management Agents (NAMA), and this was done to ensure that there was wide representation to look after the financial issues around schemes. On the other had, the Deeds Registries Act dealt purely with registration issues, which was the reason why members of that Board were conveyancers and Registrars of Deeds, who had specialised knowledge of registration issues. No financial matters were raised in the Deeds Registries Act, with the result that there was no need to widen the Deeds Registries Regulation Board.

Mr D Worth (DA, Free State) noted that the Banking Council had problems with attendance at meetings. He wanted to know at how many meetings it had been impossible to get a quorum, and how it was intended that this would be addressed.

Mr Tsotetsi noted that in fact attendance should not be problematic, since the Board was required only to meet once a year. In essence, it was a technical board. It could meet more times, to discuss pressing issues. Only those extra meetings had proved problematic, if all members could not attend at the time arranged.

Ms B Mabe (ANC, Gauteng) was concerned about the impact of amending the wording of certain clauses. She noted that not everyone was able to understand how the change in wording affected the meaning of the clause. She suggested that the Department should read out and explain to the Committee how the change in wording had altered the clause.

Mr Tsotetsi responded that the Secretariat would assist in explaining the wording if anything was unclear.

Departmental briefing on comments received in regard to the Bills
Sectional Titles Amendment Bill
Mr Tsotetsi outlined the comments that had been received on the Bill.

The Minister had also submitted a proposal, on Rule 42 of Annexure 8. The Minister dealt with issuing Rules on the recommendations that were made by the Sectional Titles Regulation Board established under Section 54 of the principal Act. However, Mr Tsotetsi explained that Rules were secondary legislation, and did not go through Parliamentary procedures. The Department would respond explaining the position of rules, and would forward the comment to the Sectional Titles Regulations Board.

Mr Tsotetsi noted that another comment was received from the Organisation for Civic Rights. However, this was not directly related to the Bill. It was suggesting that the rules of conduct should not be used to incorporate certain regulations. He explained that it had proposed that the Act should be amended, to provide that the body corporate and trustees should not have the right to interview an owner’s prospective tenant. This comment was misplaced. Sectional Titles were private property, and in terms of Regulation 30(4), body corporates were free to prescribe how they wished to regulate their own matters.

Mr Tsotetsi noted another comment about the number of occupants who should be allowed to occupy each dwelling. He said that this was a local government matter, as it involved issues of hygiene and safety.

Mr Mokgoro asked if the Department needed formal permission from the Committee to address such issues and respond to those making submissions.

Mr Tsotetsi responded that the Department did not need consent from the Committee, but was informing the Committee of its proposed response to those making submissions. These responses would serve to show that the proposals had been considered, and educate the public further.

The Chairperson then requested a copy of the written responses from the Department to the public submissions, to ensure that the Committee was fully apprised of all concerns.

Ms Reynolds noted to the Chairperson that the next meeting would be held in April 2011. The Department’s call for proposals for the amendment of the regulations would then result in a Government Notice for amendment of the regulations, and not in the Bill.

Ms Reynolds continued that a comment had been received from the South African Property Owners’ Association (SAPOA), which was similar to the comment received from the Law Society of South Africa. This questioned whether a body corporate could approach the Court. Ms Reynolds then explained that Section 1 (3a) did allow for a body corporate to approach the Court in instances where it was unable to obtain a unanimous resolution at a general meeting. However Section 1(3a) was subject to the provisions of subsection 3(c), which stipulated that a resolution that adversely affected the proprietary rights of a member was only valid if recorded in writing.

Ms Reynolds outlined the submission in regard to Clause 10. She explained that Clause 10 provided for the amendment of Section 29, which related to the consent of all bond holders when notarial contracts were to be registered over common property. Consents were supposed to be obtained by the date of registration of the notarial deeds. However, it was in reality difficult for notaries to obtain all consents from existing bond holders, especially since bonds were registered and cancelled daily. For reasons of practicality, the Department had thus proposed that Section 29 be amended, so that consents of those bondholders registered on the date of the signing of the agreement, not the date of registration of the notarial bond, should be obtained. 

Ms Reynolds then highlighted the proposal for the amendment of Section 34 of the Deeds Registries Act, which had been discussed during the last meeting, which was related to Clause 5 of the Deeds Registries Act. She explained that at the moment, only an owner of land that was jointly owned could apply for a certificate of registered title for his undivided share in a piece of land, but not where a person had sole ownership of that share. This would allow a person who had one share in the land to divide it up still further. The amendments proposed for Clause 5(1A) would therefore read:” The provisions of subsection (1) shall apply, with the necessary changes, to any person who is the owner of the whole or a share in a piece of land and who wishes to obtain a certificate of registered title of any fraction of his or her undivided share in such land”. This was the same wording for the amendment to Section 15 of the Sectional Titles Act.

The meeting was adjourned.

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