A conversation with Willie Roos, attorney, conveyancer, and CEO of Stratafin.

Most South African sectional title owners don't know this, and the day they find out is usually the day it's already too late.

If your unit is sold at auction by the sheriff — which happens when levies and bond payments fall too far behind — the purchase price almost never covers your outstanding bond. The bank gets paid first. The body corporate's levies come out next. The municipality takes its share. What remains rarely covers the bond debt. The shortfall doesn't disappear.

Under South African law, a bank's judgment debt against you stands for thirty years. For the next three decades, the bank can attach and sell any movable or immovable property you acquire. Your future cars. Your future homes. Your future business assets. The home that was meant to be your investment can become the financial event that follows you for the rest of your working life.

Willie Roos — attorney, conveyancer, CEO of Stratafin, and one of South Africa's leading experts in sectional title financial services — described the trajectory in plain terms: "You still owe the bank the 590,000 rand. The bank can still come after you and that judgment debt stands for thirty years. They can execute on that judgment debt for the next thirty years."

The most striking part of this, isn't the law. It's how avoidable the situation usually is.

What's actually happening in South African schemes

The sectional title market has roughly doubled in the last decade. When Stratafin began analysing schemes in 2014, the country had around 60,000 schemes. Today the figure is closer to 120,000. Sectional title is now one of the fastest-growing forms of property ownership in South Africa.

The numbers underneath are less encouraging. Levy non-payment has risen from around 5% in 2014 to between 25 and 30% today. In the average scheme, roughly one in three owners is not contributing what they owe. The remaining owners cover the gap — through higher levies, deferred maintenance, accumulated municipal arrears, and the slow deterioration of the property they collectively own.

For owners falling behind, the consequence is usually invisible until it isn't. Once Stratafin or a similar collections firm is engaged, the process from issuing summons to sale in execution takes between 24 and 30 months. Their recovery rate, according to Roos, is 100%. The unit is sold. The shortfall remains.

The auction price most buyers misunderstand

It is tempting to read about properties bought at auction for R10,000 or R50,000 and assume someone got a steal. They didn't.

The purchaser at a sheriff's auction is also liable for the outstanding levies — and, in terms of Section 118 of the Municipal Systems Act, for up to two years of unpaid municipal debt before transfer. The real cost of acquisition is usually far higher than the hammer price.

The courts apply what's known as the Opperman principle when reviewing execution sales — assessing the full cost of acquisition including arrears, not just the headline number. Properties don't actually sell for ten thousand rand. The figure is just the part that goes to the sheriff.

What to do if you're falling behind

The advice from Roos is consistent and direct: if you're struggling to keep up, sell before the courts sell you out.

"If you owe the bank 600,000 and your levies are outstanding by 10,000, and the property might be worth 700,000, you walk away with 90,000 rand in your pocket. You can start out fresh. Maybe a bigger scheme where the levies are less. Maybe a smaller unit. But you walk away with something rather than nothing."

The pattern Roos sees most often is owners who wait too long. They stop opening the letters, ignore the summons, and only call when the auction is days away. By that stage, stopping the process no longer makes financial sense for anyone. The body corporate has spent the legal fees. The bank has approved the execution. The unit goes to auction. The owner loses everything.

Stratafin runs what it calls a Help You Sell programme — engaging defaulting owners at each stage of the legal process to negotiate with their banks, coordinate estate agents, and structure a sale that recovers some equity before the courts take the decision out of the owner's hands. The earlier the call, the better the outcome.

What buyers need to check before signing

The principle Roos applies to sectional title is the same anyone would apply to buying shares in a company. You would never buy a business without looking at its financials. The same logic applies to property in a scheme.

Before signing an offer to purchase, buyers are entitled — by law — to the following documents:

The audited financial statements, which must be produced within four months of financial year end. The debtors report, showing how much is outstanding from how many owners and for how long. The 10-year maintenance plan, which all schemes are legally required to have and to fund. The insurance schedule, particularly the position on geysers and resultant damage. The scheme rules, which can be amended by owners and may differ materially from the prescribed rules. And the sectional plan, which confirms exactly what's included in the section, what's exclusive-use, and what is common property.

Owners and prospective buyers are entitled to all of this under Prescribed Management Rules 26 and 27, confirmed in the Johannesburg High Court case Montrose Mews v Müller. If a managing agent refuses to provide it, cite the case and escalate. The information must be provided.

The AGM argument

The single most undervalued action a sectional title owner can take is also the simplest: attend the AGM.

Roos described an AGM held two nights before our conversation — called specifically to discuss the scheme's maintenance future, attended by fewer than a third of owners. The decisions that determine the value of every unit in that scheme were made without input from two-thirds of the people most affected by them.

Owners who don't participate in the governance of their scheme leave the management of their single largest investment entirely in someone else's hands. Budgets get approved without scrutiny. Trustees get re-elected by default. Maintenance gets deferred without dissent.

"Property is the largest investment most South Africans ever make. And then they don't care. They just leave it in other people's hands."

Twenty-five percent of owners is enough to call a special general meeting. Trustees can be removed. Managing agents can be replaced. Maintenance plans can be voted on. The mechanisms exist. Most owners simply don't use them.

The short version

Sectional title is not a bad investment. It becomes one the moment the owner stops paying attention.

The schemes that hold their value have informed, engaged owners who ask for the financials, attend the AGMs, and act early when something is wrong. The schemes that deteriorate have owners who don't.

If you're falling behind on levies, sell while there's still equity. If you're buying, ask for the documents — and read them. If you already own, attend the next AGM.

The thirty-year problem is real. The only thing that prevents it is acting in time.