Section 25(4)(b) of the Sectional Titles Act 95 of 1986 (the Act) provides for the subdivision and cession of a real right of extension, reserved in terms of section 25 of the Act. It often happens in practice that the developer opens a sectional title register in respect of two insignificant sections, sometimes a mere two square meters in extent, and reserves a right of extension in respect of the remainder of the scheme. The reservation is, more often than not, divided into different portions of land comprising the scheme, for which separate diagrams are framed and approved (see RCR 66 of 2009).
On cession of the respective subdivided portions of the real right of extension to the cessionaries, a body corporate does not come into existence. The new cessionaries merely become “co developers” of that part of the common property ceded to them. Should the period of time stipulated in the real right of extension of the portion so ceded lapse, the right so ceded lapses and that portion of the common property comprising the subdivided real right of extension vests in the initial developer being the owner of the two insignificant sections, provided no other subdivided real right of extension is still operative. The co developer loses all right he/she had as developer or co developer.
The question requiring an answer is how the former cessionaries of the real rights of extension which has lapsed can again obtain title to their real right, should they so wish?
The only solution to this scenario would be for the initial developer to apply de novo for the reservation of the real right of extension in terms of section 25(6A) of the Act. This application can obviously only be brought once the certificate(s) of real rights have been endorsed in terms of section 15B(d)(1) to indicate the lapsing thereof (see RCR 5 and RCR 10 of 2012).
Together with the reservation of the real right new plans, proof and documentation as provided for in section 25(2) of the Act must be lodged with the application made by the original developer. The respective certificate(s) of real rights of extension will be issued to the developer who in turn will have to cede the newly subdivided rights of extension to the holders by virtue of a new agreement.
This is a very laborious and a costly procedure given the transfer duty implications. However, there is no other way of addressing the issue of subdivided real rights of extension that have been ceded and the time period in which such right must be exercised has lapsed, prior to the building(s) being erected.
Developers and co developers are warned to monitor the period for which the right was initially registered, as they do not have any mechanism in terms of the Act or the common law to extend the period of time, prior to the body corporate being established, or where the time period has lapsed by effluxion of time (see in this regard the unreported case of SP and C Catering Investments (Pty) Limited v The Body Corporate of Waterfront Gauteng and 17 Others (Case No. 84 of 2009).
Please do not hesitate to contact us if you require more information.
TONKIN CLACEY PRETORIA
012 346 1278