In this edition of Real Estate Jargon Explained, I will be demystifying the difference between sectional title ownership and freeholding. In South Africa these are two popular forms of home ownership and they have different meanings that must be understood before one buys property.
Consider buying a townhouse in a complex of some sort. A freeholding would entitle you to the lands defined by the contract and the home upon that land. Your house would have it’s own ERF number and you would be responsible for paying all of the rates and taxes associated with this property. Now, with a freeholding there is no Body Corporate for the management of the estate, thus fees for membership of the estate are not levied. However, a Home Owner’s Association is generally set up to deal with care of the roads and communal areas within the estate. Thus, a small fee is usually paid by the members of the Home Owners Association for this service.
On the other side of the coin, sectional title ownership entitles you to the home upon the land, however that land is not your possession. The Body Corporate of the estate in which the sectional title home is a member establishes strict rules for the appearance of the home and maintenance. The fees are paid to the Body Corporate and these costs are based upon factors such as the size of the home relative to the total area of the estate. The only fees the sectional title holder is responsible for are the rates and electricity costs. Finally, if a home wants to be altered or renovated, it must cleared by the Body Corporate.
So, these considerations are important when deciding whether the home you wish to buy is suitable for all of your requirements. Good luck making your choice!