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WCLawyer
WCLawyer, Attorney
Category: South Africa Law
Satisfied Customers: 14735
Experience:  L.LB (UOVS)
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We from B.C 60% and a 40% split. the building burned down,

Customer Question

We from B.C 60% and a 40% split. the building burned down, our son was trapped and burned badly. We own 60% and in our 70'ts and we don't want to rebuild. We want to take our share of the insurance money of our 60% and want to sell our 60% of the land. The 40% owners have first option to buy us out but wont pay our price. We have another person who want to buy the land with their inc. hey refusing to sell or pay our price and forcing us to rebuild. What do we do. we want out.
Submitted: 10 months ago.
Category: South Africa Law
Expert:  WCLawyer replied 10 months ago.
Good day and thank you for your question. My name is XXXXX XXXXX X will try and assist you today.

In order to provide you with the most accurate answer, I may have to ask you a lot of questions. This may seem tedious and irrelevant, but trust me, there is a reason for every question. So please be patient throughout the process and if it takes a little long for me to come back to you, it is probably because I am researching your answer. I hope that is okay.

Just to confirm my understanding: This is a sectional title scheme with two units?
Customer: replied 10 months ago.

it is a building we build in a family trust it is 2000sq. We sold 40% of the building 3 years ago and didn't get the right information regarding the stand and thus have sold the 40% only of the building and not of the stand but that's water under the bridge. we standing now at the final stage of the Insurance settlement.

Customer: replied 10 months ago.

We the 60% owners want to sell. We form a body corparate and according to the sectional title act we have to give the 40% share holder first option to buy us out. They don' t want to they want to build on their 40%. We have a buyer for the land once we demolished the ruins. The buyer wants the full 100% Land. so now we sitting with what do we do?

Expert:  WCLawyer replied 10 months ago.
Is the stand not the common property of the sectional title scheme?

Are you sure this is the sectional title act and not the Shareblock Control Act?
Customer: replied 10 months ago.

It is a sectional title scheme. The two units under roof are 60 and 40 % of building and the rest was common property where the koi pond and walking area, public toilets, play gym, parking area and so on. Can i send pic. If you look at the pic u will see on the left and right their was a buildings. It was split by the koi pond in the middle. It was a 60 and 40 split with the common property we shared.

Expert:  WCLawyer replied 10 months ago.
There is nothing in the Sectional Title Act that says that you must give the other owners of the sectional title scheme first option to buy. Are you possibly referring to something in your rules that says that?
Customer: replied 10 months ago.

yes with the sale of the 40% there was a clause put in that gave them first option to buy and if they can not match the highest bidder then we can sell. The question now comes in how does the sale work regrading the full 100% does it work on the majority vote or not. Senario - we own the 60% and we want to sell and not rebuild are we entitled to do so if the 40% doesn't want to buy the land from us? Will they be forced to sell if their undivided 40% share in the land? Lastly what is the law regarding the Insurance pay out for the Burned down building? Does each share holder get their percentage share of the payout or not?

Expert:  WCLawyer replied 10 months ago.
It is very difficult for me to give you an accurate answer without having a look at the documentation that you are referring to, as well as your sectional title plan. How sectional title works, however, is that you normally have units and you have common property. The units (normally the dwellings) belongs to the owners and the land (or part of it) belongs to the Body Corporate, which consists of all the owners. So, your rights in the common property is connected to your ownership of one or more of the units.

If there is a right of first refusal in favour of the other owners and they refuse that right, then you can sell. How a right of first refusal works is that you need to offer it to the holder of the right of first refusal first, at the same terms as it was offered to your potential buyers. If they then refuse, you can sell it to your prospective buyers.

From the information that you have given me, I can see nothing that says that you may not sell the unit, even if it is in that state.

I cannot give you a definitive answer with regards XXXXX XXXXX insurance, unfortunately. Normally the Body Corporate will insure the buildings against destruction, so under normal circumstances, the Body Corporate must rebuild with the payout.

This may be different in your particular circumstance, but unfortunately I cannot say that with any certainty.

I am sorry for the cryptic nature of the answer, but this is the best I can do at this stage with the information at my disposal. If you have follow up questions before you rate, feel free to ask them at no extra cost. If you are satisfied with the service, kindly rate it positively. I do not get anything unless you rate the service.
Customer: replied 10 months ago.

Thank you for your input so far.


So the sale of the land does not work on the majority voting system then.


What do we stand to do now that we do not want to rebuild?


I will got and follow up exactly what the Insurance Company says regarding any clauses stipulating the situation of rebuilding or not.


 


So Legally we are at a dead off and no one can do anything regarding rebuilding or selling as we are not in agreement regarding the situation surrounding the building?


 


The other party was saying today in the AGM that they want to buy out our share but only for the value of the land and then they take all the insurance money?


 


This to me is fraud to say the least as we have 60% share holding in the BC which is also the owner of the policy which in turn is then still 60% of the claim amount our rightful money. Is this correct ?


 


Sincerely

Expert:  WCLawyer replied 10 months ago.
The Body Corporate cannot use the money for anything other than rebuilding, if the insurance money is due to the BC. It all depends on what is shown as a unit and what is shown as common property on the Sectional Title Plan.

The sale of the land does not work on the majority system, no. If common property is to be sold, then it must be unanimous.

The unit is yours. You can sell it, because you have title. It just seems as if there is a procedure that you need to follow first and which seems to have been completed. Nothing you have said gives me the idea that they can legally force you to sell your unit for whatever price they dictate.

I wish I could sit down with you and go through your stuff, but (and I do mean this with the greatest of respect to you) I get the idea that you and the other owner is not particularly clear on how sectional title works. It is a complicated area of the law, however and I suggest that you maybe read up on the basics.

There is a very good website at www.paddocks.co.za that explains it in more detail and maybe that will clear up some of the confusion.

If you have any follow up questions at any time, today, tomorrow or whenever, I will be here.
WCLawyer, Attorney
Category: South Africa Law
Satisfied Customers: 14735
Experience: L.LB (UOVS)
WCLawyer and 3 other South Africa Law Specialists are ready to help you
Customer: replied 10 months ago.

Thank you. yes this is very stressful for the lawyer that set up the B.c does not really give us clear answers. We all clueless with the Sectional title act.


 


If we want out can we insist that they pay us out for our portion. Then they take the insurance money to rebuild?


 


We want nothing to do with the building or the shareholders at this point. this has been a nightmare and we want to close the book on this chapter.

Expert:  WCLawyer replied 10 months ago.
You would not be able to force them to buy it either. But, you have title of your unit, which means that you can sell it to any willing buyer you can find. The insurance money must be utilized to rebuild your unit if it is to be paid to the BC. If it has to be paid to you, then you have to rebuild. The Sectional Title Act says that you have a responsibility to maintain your unit, but the BC has a duty to make sure that you maintain it.

I suggest you consider rebuilding and then selling. But you also need to get a second opinion from an attorney that is proficient in property law and who had the opportunity to go through your Sectional Title Scheme Plan and whatever paperwork you have.
Customer: replied 10 months ago.

Thank you so much for your feedback. We really appreciate it a lot.

 

I was wondering if you could answer one more question?

Expert:  WCLawyer replied 10 months ago.
Go ahead.
Customer: replied 10 months ago.

i have wrapped my head around in this and everyone seems to have a different answer to suit themselves.


 


I hope i make sense. The Kemp family trust owned the whole property and sold 40% to Purple Plum 3 years ago. Which a Body Corprate was formed.


 


Then Kemp family trust sold 15% to Oak park this year.


 


Now does oak park get 15% shareholding of the full 100% ownership or does oak park only share in The Kemp family trust of 60% where they bought from?


 


The building burned down and the insurance money is being paid out and they selling the land.


 


So does oak park of 15% only share from the 60% who they bought from or from the 100% total of the insurance money and land?


 


Please help!!!!!

Expert:  WCLawyer replied 10 months ago.
Let us recap:

There are two units, correct? Which unit did purple plum buy or did purple plum buy 40% stake in each property?
Customer: replied 10 months ago.

Purple plum bought Unit 2. Oak park bought 163 sq of Unit 1 from Kemp family trust that gave her 15% shares.


 


Under roof is 1000sq Unit 1 and unit 2.


 


Purple Plum bought Unit 2 that was 400sq and Kemp family had unit 1 that was 600sq.


Oak park bought 163sq from Kemp family trust.


 


The remaining 1000 sq went under common property.


 

Expert:  WCLawyer replied 10 months ago.
Okay, let us forget about who owns what for a minute. The problem is that they tell you that you cannot sell, correct?
Customer: replied 10 months ago.

that problem is sorted now. Now comes the share in the money from the insurance and the ground.


 


How does the money get split between the 3 entities ?


46% ; 14% ; 40%


or does the 14% only get from the 60% that they bought in from.


 


Sorry for all the questions but want to make sure.


I do understand that the 40% get 40% of the full payable amount but the 14% only bought from the 60% KFT and not the complete BC of 100% and therefore our question.


 


Thanks in advance

Expert:  WCLawyer replied 10 months ago.
The insurance money belongs to the body corporate and must be utilized towards the good of the body corporate. There is nothing in the Sectional Title Act that says how insurance money is to be divided between owners of a Sectional Title Complex. The insurance money must be used to make good any damage to the common property (the buildings in this instance). Where there is a shortfall in the insurance money, the shortfall is usually collected with a special levy.

It would therefore be impossible for me to tell you how to divide the insurance money if that is what everybody's intention is with the money, since the Act simply does not contemplate such a situation. It is, therefore, dependent on what can be agreed to between the owners of the units.
Customer: replied 10 months ago.

 


The lawyer is going to termanate the Body Corparate because the building burned down. he said each one should take their portion of the insurance and they selling the Land.


 


That is why we needed to know about oak park how their share would work because they only bought in this year from Kemp family trust.


 


Thank you for your time.


 


 


 

Expert:  WCLawyer replied 10 months ago.
I would assume then that each of you are entitled to your share of the insurance money according to your respective participation quotas and if the common property is sold, each of you would be entitled to the proceeds of that sale also according to your participation quotas.
Customer: replied 10 months ago.

Once again thank you so much.

Expert:  WCLawyer replied 10 months ago.
It really is my pleasure

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