Although it is not an everyday occurrence it happens frequently that Bodies Corporate fall victim to natural disasters such as a flood or a building that is damaged due to land subsidence. Sectional Title Complexes developed in a dolomite area most likely run the risk of the latter.
As an example, the Body Corporate of River Bend consists of three buildings. Building one comprises of Sections 1 – 4, Building two comprises of Sections 5 – 8 and Building three comprises of Sections 9 – 12.
The Body Corporate is located next to a river and the layout and design of the Complex allows for building 1 to be located nearest to the river.
Due to a heavy rain storm the river overflowed its banks resulting in building 1 being destructed. In such an instance the provisions of Section 48 and/or 49 of the Sectional Titles Act, Act 95 of 1986 (hereinafter referred to as the Act) and depending on the circumstances will find application. Section 48 deals with the destruction of or damage to a building or buildings and Section 49 with the disposal on destruction of buildings.
Further provisions of the Act and Prescribed Management Rules ( Annexure 8 ) which might also find application and depending on the circumstances are:
1. Section 16: Ownership of common property
2. Section 37: Functions of Bodies Corporate
3. Section 45: Insurance by owners
4. Rule 29 Insurance: Annexure 8 to the Act (Management Rule)
In terms of Section 48 a building or buildings is deemed to be destroyed:
(a) upon the physical destruction of the building or buildings;
(b) when the owners by unanimous resolution so determine and all holders of registered sectional mortgage bonds and the persons with registered real rights concerned, agree thereto in writing; or
(c) when the Court is satisfied that, having regard to all the circumstances, it is just and equitable that the building or buildings shall be deemed to have been destroyed, and makes an order to that effect.
In the case of the River Bend Body Corporate the provisions of Section 48(1)(a) will find application. Members may in accordance with the provisions of Section 48(3)(a) of the Act by unanimous resolution or the Court, upon application thereto, authorise the rebuilding and reinstatement of building 1 in whole (Sections 1- 4) or in part (only Sections 3 and 4 thereof for example). If the building was insured against the risk of the river overflowing its banks, the insurance funds can be utilised to rebuild the destroyed Units.
If the building was not insured against the risk of flood damages and that in spite thereof the members still resolved to proceed to rebuild building 1, then the Body Corporate will have to make payment of the replacement costs of Sections 1 – 4 and all the members inclusive of the owners of Section 1 – 4 will be held pro rata responsible in accordance with their respective participation quotas for the rebuilding costs.
The members can also unanimously resolve to only partial rebuild building 1 (only Section 3 and 4 and not 1 and 2).
It is also an option available to the members to resolve by unanimous resolution not to rebuild building 1. In such an event, the procedures prescribed in Section 49 must be complied with, which inter alia includes the obligation to notify the Registrar of Deeds in the prescribed manner of the destruction and to furnish to the Registrar a copy of the resolution, certified by two Trustees. The Registrar will then make the necessary inscriptions on the Sectional Title Register and the effect of this procedure would be that the owner of Units 1 – 4 are no longer to be members of the River Bend Body Corporate and that the participation quotas will have to be amended, as every member in the Body Corporate would hold a larger undivided share in the common property.
The aforesaid requirements and procedures are technical and should your Body Corporate ever be confronted with a situation where a building / buildings were destroyed, it is advisable to consult an attorney especially a Conveyancer that is familiar with the Act and Regulations promulgated there under.
Article by Izak du Pisanie EY Stuart Attorneys – Pretoria