When purchasing a sectional title property, it is easy to focus on the purchase price, levies, and transfer costs. However, there is one clause that is often overlooked in Offers to Purchase, yet it can have a significant impact on your future property investment.
Muriel Snyders BA. LL.B. Attorney, Notary, Conveyancer at DKVG Attorneys explains that many draft Offers to Purchase include a clause stating that the property forms part of a sectional title scheme and that a real right of extension may be or is reserved in favour of the developer or the body corporate. Unfortunately, this clause is often not explained to prospective purchasers, and many then simply assume it is standard wording without understanding what it really means.
What is a real right of extension?
A real right of extension gives the developer the legal right to extend the sectional title scheme in the future. This could include constructing additional units, adding new buildings, or expanding existing structures, even after you have purchased and moved into your property.
While this does not necessarily mean that further development will take place, it does mean that it remains a possibility.
Why does this matter?
Understanding whether a real right of extension exists can help you make a more informed purchasing decision because future development may:
- Affect your views, natural light, or privacy.
- Increase the number of residents and traffic within the scheme.
- Change the character of the development.
- Influence the future market value of your property.
Imagine purchasing an apartment for its uninterrupted sea or mountain views, only to discover later that another building could legally be constructed directly in front of it.
An important legal protection
The law requires that where a developer has reserved a real right of extension, this must be disclosed in the sale agreement. If this mandatory disclosure is omitted, a purchaser may, in certain circumstances, have the right to cancel the agreement.
Our advice to purchasers
Before signing an Offer to Purchase, do not simply skim over this clause. Ask questions and ensure you understand:
- Whether a real right of extension exists and for how long.
- Who holds that right, being either the developer or the body corporate.
- Whether any future development is planned or remains possible.
- How it could affect your property and your investment over time.
A few minutes spent understanding this clause today could save you from unexpected surprises in the future.
Buying property is one of the biggest investments you will ever make. Make sure you know exactly what you are buying, not only today, but also what could change tomorrow.
*This article is for general public information and use. It is not to be considered or construed as legal advice. Each matter must be dealt with on a case-by-case basis and you should consult an attorney before taking any action.
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