Cancellation of an exclusive use area

Introduction

Recently I received an interesting consultation request to give advice on the cancellation of an exclusive use storeroom. In this scenario the scheme had a storeroom that had been allocated to an owner for their exclusive use by way of an exclusive use rule in terms of sections 10(7) and (8) of the Sectional Titles Schemes Management Act 8 of 2011 (the “STSM Act”). Due to the need for the installation of alternative power sources, the body corporate now requires the use of the storeroom for the storage of solar batteries. The exclusive use storeroom is therefore required to be used for the shared benefit of all the owners once again.

Rule based exclusive use rights

Exclusive use rights created in the schemes rules are done so in terms of sections 10(7) and (8) of the STSM Act, which states that:

“10(7) A developer or a body corporate may make management or conduct rules which confer rights of exclusive use and enjoyment of parts of the common property upon members of the body corporate.

(8) The rules contemplated in subsection (7) must

(a) include a layout plan to scale on which is clearly indicated

i) the locality of the distinctively numbered exclusive use and enjoyment parts; and

ii) the purposes for which such parts may be used; and

(b) include a schedule indicating to which owner each such part is allocated.”

The creation of rule-based exclusive use rights

The exclusive use rights can be created in either the management or conduct rules. The main distinction between the management and the conduct rules is the way they can be amended. In terms of section 10(2)(a) of the STSM Act, the owners can change management rules by taking a unanimous resolution. Conduct rules can be changed by a special resolution of owners in terms of section 10(2)(b) of the STSM Act.

Section 10(5) of the STSM Act deals with the filing of scheme rules. Section 5(a) of the STSM Act states that if the management or conduct rules are substituted, added to, amended or repealed, the developer or the body corporate must lodge with the chief ombud a notification in the prescribed form of such substitution, addition, amendment or repeal. The prescribed form is set out in Form B of the Regulations made under the STSM Act. Section 5(b) of the STSM Act states that the chief ombud must examine any proposed substitution, addition, amendment or repeal of the rules, and must not approve it for filing unless he or she is satisfied that such substitution, addition, amendment or repeal is reasonable and appropriate to the scheme. Section 5(c) of the STSM Act states that if the chief ombud approves the substitution, addition, amendment or repeal of rules for filing, he or she must issue a certificate to that effect. Section 5(d) of the STSM Act states that a substitution, addition, amendment or repeal of rules comes into operation on the date of the issuing of a certificate or the opening of the sectional title register for the scheme, whichever is the latest.

The nature of rule-based exclusive use rights

An exclusive use rule gives the occupier of the unit exclusive rights and enjoyment to a part of the common property. Exclusive use rights created in terms of sections 10(7) and (8) of the STSM Act, are not real rights in immovable property, and are not capable of registration. The rules create personal rights that bind the body corporate as well as all owners and other occupants of sections in terms of section 10(4) of the STSM Act. These exclusive use rights are only effective against the body corporate of the scheme, all other owners and occupiers of units. Rules normally oblige the body corporate to take all necessary steps in its power to ensure that the exclusive use areas are reserved for the sole and exclusive use of the relevant owners.

Is it possible to cancel exclusive use rights?

Rules conferring exclusive use can be removed in the same manner as they are created. If exclusive use rights are conferred by the management rules, they can only be amended by a unanimous resolution of the body corporate. If they are conferred by the conduct rules, they can be amended by a special resolution of the body corporate. The rules of every scheme are filed at the Community Schemes Ombud Service, and an amendment is only effective once the chief ombud issues a certificate of approval in terms of section 10(5)(d) of the STSM Act.

What if the body corporate cannot obtain the required resolution to cancel the exclusive use right?

If the body corporate fail to pass the required resolution to cancel the exclusive use right they will be forced to make an application to the Community Schemes Ombud Service. Section 39(3)(d) of the Community Schemes Ombud Service Act 9 of 2011 (the “CSOS Act”) contains a prayer for relief that could assist in this regard. It states that:

“39. An application made in terms of section 38 must include one or more of the following orders: (3) In respect of scheme governance issues

(d) an order declaring that a scheme governance provision, having regard to the interests of all owners and occupiers in the community scheme, is unreasonable, and requiring the association to approve and record a new scheme governance provision

(i) to remove the provision;

(ii) if appropriate, to restore an earlier provision;

(iii) to amend the provision; or

(iv) to substitute a new provision.”

Conclusion

It is possible to cancel exclusive use rights that are contained in a scheme rule by following the process as set out above. It may seem unfair that an owner may lose his or her right to the exclusive use of a part of the common property in this way, but if it is for the greater good of the community it can be legally justified.

Where an owner wishes to have a stronger claim to their exclusive use right they should insist that their exclusive use rights be created in terms section 27 of the Sectional Titles Act 95 of 1986. These are registered rights to real property recorded in the Deeds Registry. A holder of such rights has absolute rights that they can enforce against any other person at all, by instituting legal proceedings. In terms of section 27(6) of the ST Act, a right to the exclusive use of a part of common property registered in favour of an owner of a section, shall for all purposes be deemed to be a right to immovable property over which a mortgage bond, lease contract or personal servitude of usufruct, usus or habitatio may be registered. Cancellation of registered exclusive use rights can only be done by registration of a notarial deed entered into by the body corporate, and the holder of exclusive use rights created in terms of section 27 of the ST Act. The body corporate requires the authority of a special resolution and any holder of a bond over the section to which that exclusive use area is allocated, must consent to the cancellation of the exclusive use right in terms of section 27(5) of the ST Act.