You're not just buying a unit. You're buying into a system — and what you don't know about that system can cost you dearly.

Sectional title is one of the fastest-growing forms of property ownership in South Africa. From compact apartments to large gated estates, the number of schemes has reportedly doubled in the last decade — from around 60,000 to 120,000. Yet most buyers still don't fully understand what they own, what they owe, or what their rights are when things go wrong.

In a recent conversation with Willie Roos — attorney, conveyancer, CEO of Stratafin, and one of South Africa's leading experts in sectional title financial services — we unpacked the most important things every buyer, seller, and investor needs to know.

What Do You Actually Own?

In sectional title, you own from the middle of the brick inwards. Your unit — the interior living space — is yours exclusively. Everything from the middle of the brick outwards, including the building structure, roof, gardens, driveways, pool, and the land itself, is common property, owned jointly with all other unit holders in proportion to your Participation Quota (PQ).

Your PQ is calculated as your unit's floor area as a percentage of the total scheme. It determines how much levy you pay, how special levies are split, and what share of the land value you'd receive if the scheme were wound up.

If you live in a scheme within a larger estate — like a sectional title apartment block inside a gated HOA — you may pay two levies: one for the sectional title body corporate and one for the homeowners association.

HOA vs Body Corporate: What's the Difference?

A homeowners association (HOA) is typically a company under the Companies Act. Each stand is separately owned, and the HOA maintains the shared infrastructure — roads, entrance walls, clubhouse, and so on. Owners are responsible for their own homes and land.

A body corporate is the legal entity formed by all unit owners in a sectional title scheme under the Sectional Titles Act. It is responsible for maintaining all common property, and owners contribute through levies.

The legislation governing each is different, the rules can differ scheme to scheme, and — critically — buyers need to understand which they're buying into and what obligations come with it.

Levies, Special Levies and Rates: A Plain-Language Breakdown

Monthly levies fund the day-to-day running and maintenance of the scheme — security, gardens, common area electricity and water, managing agent fees, and contributions to the maintenance reserve.

Special levies are raised for urgent, unbudgeted expenses — a water tank that burst, a lift that failed, storm damage not covered by insurance. They are not optional and are calculated by PQ.

Rates and taxes — since 2008, every sectional title owner is individually liable for their own rates. This is not included in your levy. Make sure your details are registered with your local council.

CSOS levies — the Community Schemes Ombud Service charges a levy to all schemes monthly. This typically appears as a line item on your levy statement.

The smaller the scheme, the higher the levy is likely to be — because the same fixed costs (security, maintenance, management) are divided among fewer payers.

The Levy Crisis: One in Three Owners Isn't Paying

When Stratafin began analysing schemes in 2014, levy non-payment sat at around 5%. Today it's 25 to 30%.

The consequences are severe: maintenance gets deferred, municipal accounts fall into arrears, services get disconnected, and compliant owners end up paying more to cover the shortfall. Special levies follow.

If you're buying into a scheme, ask for the debtors report. Understand how many owners are in arrears and for how long. A scheme with a large outstanding levy book is a liability you're inheriting — not someone else's problem.

What Happens When Owners Don't Pay?

Stratafin's model works like this: they advance funding to the scheme (not a repayable loan — recovered through collections), then pursue the debtor through the courts. The process from issuing summons to sale in execution takes roughly 24 to 30 months. Their recovery rate is 100%.

At auction, the purchase price can appear deceptively low. But the buyer at that auction is also liable for the outstanding levies and up to two years of municipal debt in terms of Section 118 of the Municipal Systems Act. The real cost of acquisition is far higher than the hammer price.

More importantly: if your unit is sold in execution and the purchase price doesn't cover your outstanding bond, the bank can still pursue you for the shortfall for up to 30 years. You lose your equity, your home, and your financial freedom.

The advice is consistent: if you're struggling to keep up, contact an estate agent and sell while there's still equity. Walk away with something rather than wait for the courts to sell you out at a fraction of market value.

Trustees and Managing Agents: Who Does What?

Trustees are like the directors of a company. They are responsible for the day-to-day governance of the scheme, setting the budget, ensuring compliance, and overseeing the managing agent. They don't have to be owners — and in some cases, paid professional trustees are appointed. Owners cannot be paid trustees unless the other owners agree.

Managing agents are service providers appointed by the trustees. They handle levy collection, maintenance coordination, financial reporting, and compliance administration.

Executive managing agents — a newer concept — step into the shoes of the trustees and have executive decision-making powers, not just administrative ones.

Court-appointed administrators — in dysfunctional schemes, the court can appoint an external administrator to take over completely. Stratafin's administration business, Confiance Administrative Solutions, currently manages numerous such schemes across South Africa, typically for an initial three-year period.

If you're unhappy with your trustees or managing agent, your options are: raise it at the AGM, direct the trustees to make a change, or get 25% of owners together to call a special general meeting where trustees can be removed and replaced.

What to Check Before You Buy

Think of buying into a sectional title scheme like buying shares in a company. You would never buy a company without seeing its financials. The same logic applies here.

Before signing an offer to purchase, ask for:

Audited financial statements — must be produced within four months of financial year end. If unavailable or outdated, that's a compliance failure and a red flag.

The debtors report — how much is outstanding, from how many owners, for how long.

The 10-year maintenance plan — legally required. Maps out future maintenance costs. Check whether there's a funded reserve to match it.

The insurance schedule — what the body corporate's policy covers, specifically regarding geysers, resultant damage, and pipes.

The scheme rules — rules vary from scheme to scheme and can be amended. Pets, alterations, conduct — know what you're signing up to.

The sectional plan — available from the Surveyor General. Confirms what you're actually buying: your section, any exclusive use areas, and what is common property.

Owners are legally entitled to all scheme information under Prescribed Management Rules 26 and 27, confirmed by the Johannesburg High Court in Montrose Mews v Müller. If a managing agent refuses, cite the case and escalate.

Insurance: Don't Assume You're Covered

The body corporate insures the buildings — but what's actually covered varies.

Geysers: Legally the owner's responsibility under the act, but many schemes include them in the body corporate policy. Check your specific policy — don't assume.

Resultant damage: Damage caused by a burst geyser or pipe flooding your unit may or may not be covered by the body corporate's insurer. If the pipe was your responsibility, the claim likely won't be covered.

If the building burns down: Your bank is noted as a beneficiary and is paid out first. You receive any surplus above your bond, plus a share of the land value if the scheme is wound up. Make sure your personal household insurance covers contents, improvements, and any liability for damage to other units.

Alterations: You Need Permission

Everything outside the middle of your brick is common property. That means you cannot enclose a balcony, erect a carport, or make structural changes without body corporate approval — and in some cases, without town planning approval as well.

Even trustees cannot authorise something that exceeds the scheme's permitted coverage under town planning rules. If an alteration increases your floor area, the sectional plan and PQ must be updated accordingly.

Non-compliant alterations must be disclosed when selling. Buyers inherit the problem. If the body corporate obtains a court order, the cost of reinstatement falls to whoever owns the unit at the time.

Go to Your AGMs

This point sounds simple. It isn't followed.

Owners who don't participate in AGMs leave the governance of their largest investment entirely in someone else's hands. Budgets get approved without scrutiny. Trustees get re-elected by default. Decisions get made — or don't get made — without the input of the people most affected.

If you own a sectional title unit, attending your AGM is not optional. It is how you protect your asset.

Sectional title is not a bad investment. But it can become one when owners don't understand the rules, don't pay their levies, and don't participate in the governance of their scheme.

The schemes that hold their value are the ones where owners are informed and engaged. The ones that deteriorate are the ones where nobody asked the right questions — when buying, when the financials weren't produced on time, when the levies started climbing, or when the maintenance stopped happening.

Ask the questions. Read the documents. Work with agents who understand what they're selling. And go to your AGM.

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