In some cases the Housing Development Schemes for Retired Persons Act, 1988 (the “Retirement Housing Act”) may apply to a sectional title scheme established in terms of the Sectional Titles Act, 1986.

This can cause some problems for a purchaser who did not intend to purchase in a retirement housing scheme.

This happened in a recent case decided in the Supreme Court of Appeal in which the court sought to provide some clarity on the matter.

The Faeri Glen Renaissance Scheme was developed in terms of Sectional Titles Act. The body corporate (BC) of the scheme then sought to amend its management rules to bring them in line with the Retirement Housing Act by imposing an age restriction for the occupants. In order to amend the rules, the BC required a unanimous resolution.

Certain of the owners in the scheme opposed the proposed amendment to the rules and the required resolution could not be achieved. The BC approached the High Court for relief where dissident owners opposed the application by the BC claiming that, if the amendments were effected, their proprietary rights would be adversely affected.

The High Court granted an amendment to some of the management rules and the owners appealed to the Supreme Court of Appeal which found that the Retirement Housing Act had, in any event, been applicable to the development scheme since its inception because, inter alia:

- The developer, in the agreements of sale of the units in the scheme, had restricted the rights of occupation to retired persons.

- The agreements of sale also provided for sections 4(3) and 8 of the Retirement Housing Act to apply. These sections deal with instances where the purchaser is entitled to cancel the agreement if the developer fails to deliver to the purchaser a certificate of completion prior to occupation of a unit sold.

- The agreements of sale also restricted the right of any purchaser of a unit or a successive purchaser to sell, lease or transfer the rights acquired by the agreement of sale if such sale, lease or transfer would result in the unit being occupied by persons in contravention of the age restriction rules.

These clauses of the sale agreement were held by the Court to be sufficient enough to render Faeri Glen Renaissance scheme a development in terms of the Retirement Housing Act and the proposed amendments did not, therefore, affect the proprietary rights of the owners concerned.

In short, this was another example of caveat emptor, let the buyer beware. The terms of the agreement of sale should have alerted the purchasers to the fact that the Retirement Housing Act applied to their purchase.

This article has been written by Simphiwe Maphumulo a director at Garlicke & Bousfield Inc.

For more information contact Simphiwe on 031 570 5300.

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