Participation Quota - Levy Contribution

 

Participation Quota - Levy Contribution

The participation quota refers to the formula that is used to calculate the section owner's levy contribution in a sectional title scheme. The participation quota determines the owner's undivided share of the common property, and the value thereof.

Before investing in sectional title property, it is important to understand how levies are calculated according to their participation quota.

Some people may argue that there are certain areas included in their participation quota that they do not use. And if they do not use it, why should they pay?

For example, a section owner who lives on the ground floor, and never finds the need to use the elevator, might see it as unfair to contribute towards the repair of the elevator.

The Sectional Titles Act

In the Sectional Titles Act clause 32(1) it states that:

“Subject to the provisions of section 48, in the case of a scheme for residential purposes only as defined in any applicable operative town planning scheme, statutory plan or conditions subject to which a development was approved in terms of any law, the participation quota of a section shall be a percentage expressed to four decimal places, and arrived at by dividing the floor area, correct to the nearest square metre, of the section by the floor area, correct to the nearest square metre, of all the sections in the building or buildings comprised in the scheme.”

This means that if the levy of the sectional scheme amounts to R500 000 per annum, at a participation quota of 5 percent, owners will have to pay a levy of R2 083 per month.

When formulating a property investment portfolio, it is important to consider these factors before you sign an offer to purchase.

Van Deventer and Van Deventer Incorporated | Property Law Attorneys in Johannesburg

At Van Deventer and Van Deventer Incorporated, our attorneys guide investors through the process of right properties, by minimising their risk and helping them understand how their participation quota would be calculated.

If you are thinking about purchasing a section in a sectional title scheme, contact us today.

 

[Title]Mandatory Disclosure Form Not Being Attached to Sale Agreement

It has always been the responsibility of property professionals to obtain as much information as they can regarding the property’s condition so that they can disclose this information to the buyer. Transparency is key when it comes to buying and selling property.

Read More ...
Posted by Cor van Deventer on Thursday, August 11, 2022 Views: 770

[Title]Struggling to Get Your Rates Clearance Certificate or Figures?

When you sell a property, you are legally required to obtain a rates clearance certificate from your local municipality. The rates clearance certificate (RCC) certifies that all rates and other municipal charges which include electricity, water, sanitation, and/or refuse are paid in full.

Read More ...
Posted by Cor van Deventer on Monday, August 8, 2022 Views: 504

[Title]Plot and Plan vs Turnkey Sale Agreements in South Africa

Property buyers have several options available to them when purchasing certain developments in South Africa. Traditionally, buyers had the option to purchase either a plot or a plot-and-plan but recently, another option known as a turnkey sale was introduced into the property market.

Read More ...
Posted by Cor van Deventer on Thursday, July 28, 2022 Views: 648