Sectional and full title property ownership determines your property insurance requirements. This can be confusing, especially for first-time home buyers.
“Freehold or full title describes the transfer of full ownership rights when you own a property, which includes the building and the land it is built on. These kinds of properties include free-standing houses, cluster houses, residential property used for business purposes, and smallholdings.
Sectional title, on the other hand, describes separate ownership of units or sections within a complex or development. When you buy into a sectional title complex, you purchase a section or sections and an undivided share of the common property. These are collectively known as units. Sectional title dwellings comprise mini subtype houses, semi-detached houses, townhouses, flats or apartments, and duet houses.” (Adrian Goslett, Remax CEO)
When buying into a sectional title complex, you become a member of the body corporate. This is a legal entity owning and controlling the common property in the sectional title scheme. When deciding to buy sectional title, remember that it is like buying into a partnership with other owners. The body corporate receives funds from all section owners by means of levies, which are used to pay for expenses. These expenses include maintenance, utility bills, services, as well as buildings insurance. Levies are calculated according to the size of the section a person owns and is usually determined by the members of the body corporate.
Advantages of sectional title:
- Owners share the responsibility for payment of the body corporate’s expenses.
- Units are usually very easily leased and are especially popular in the rental market.
- Security is also usually higher as owners often pay to have their area patrolled by a security company.
Full title ownership is a form of land ownership where an owner owns a certain piece of land and any buildings and other improvements thereon. The owner also accepts all rights and responsibilities of the property and does not share this responsibility with anyone else. This includes the responsibility for insuring the property.
Advantages of full title:
- Independence is definitely an advantage as the owner is in complete control and fully responsible for the property in its entirety.
- Whilst rules need to be adhered to by sectional title owners, full title owners have the power to change them.
- The owners can renovate and improve their properties as they wish and do not have to get approval from the body corporate.
Property owners should make sure that their units/land are insured for the correct replacement values, particularly if they have renovated or added value in some way, as the extra value might not be covered.
Your APBCO Broker can provide you with more information and advice.