What are the 3 different ways EUAs are created?
24 May 2024 | Karien Coetzee
I often get questions on exclusive use areas (EUA/s) in a Body Corporate. What is an EUA? Why are there different ways of creating EUAs? Is it purely simpler to do it one way, or are there legal reasons why one is better than the other? Who maintains the EUA and does the instance of creation change this? Let us face it, EUAs are complex, much like bodies corporate themselves, but as a student of the legislation, the answer is usually as simple as searching for it. Unless, of course, you are not so inclined. Then simply ask the Experts.
The Sectional Title Schemes Management Act (STSMA) is the legislative framework that manages and regulates a cornucopia of important elements of community scheme living, management, and behavior. It is the overarching document that gives us answers to our EUA questions.
What is an EUA?
An Exclusive Use Area is an area of the common property that is set aside for the exclusive use of one owner of a unit in a building. This owner may use, enjoy, and benefit from the EUA. A good example of this would be carports in a block of flats. Owners want specific ports allocated to their units for their benefit, and for no one else to be able to use them.
How are EUAs created?
EUAs can be created in 2 ways. However, the second way has 2 possible processes. Thus, for simplicity sake, let's call it an even 3.
Creation of EUAs by the Sectional Title Plans
EUAs can be created in the sectional titles plans by way of unanimous resolution. This means that all owners who are entitled to vote in value and number agree that the sectional title plans be amended to include EUAs that are allocated to owners. In terms of Section 5 of the STSMA.
(1) In addition to the body corporate's main functions and powers under sections 3 and 4, the body corporate:
(e) may, upon unanimous resolution by the owners, request the delineation and cession of exclusive use rights to particular owners in terms of section 27(2) of the Sectional Titles Act
Creation of EUAs by the Conduct Rules
EUAs can be created by amending the conduct rules by way of a special resolution. A special resolution is a vote in favor, by 75% of the owners entitled to vote in number and value. In terms of section 10 of the STSMA:
(2) The rules must provide for the regulation, management, administration, use and enjoyment of sections and common property, and comprise:
(b) conduct rules, as prescribed, which rules may, subject to the approval of the chief ombud, be substituted, added to, amended or repealed by the developer when submitting an application for the opening of a sectional title register, and which rules may be substituted, added to, amended or repealed by special resolution of the body corporate, as prescribed: Provided that such conduct rules may not be irreconcilable with any prescribed management rule contemplated in paragraph (a).
Creation of EUAs by the Management Rules
Remember we said 3 ways. This is also created by way of the rules, but now we are amending the management rules, rather than the conduct rules. We also need a unanimous resolution here. If you missed it, refer to the creation by way of the sectional title plans above. A rather interesting provision is contained in section 10 of the STSMA as well.
(7) A developer or a body corporate may make management or conduct rules which confer rights of exclusive use and enjoyment of parts of the common property upon members of the body corporate. This is further regulated by section 10 subsection (8), requiring a layout plan and schedule, respectively.
Which is better?
Easy… perhaps not. EUAs created in terms of the sectional title plans can be sold, bought, donated, left to someone in a will, mortgaged, or let; all because they are a registered real right, registered against the plans, and thus the title deed. EUAs created in either the conduct or management rules cannot be sold, bought, donated, left to someone in a will, mortgaged, or let; as it is not a registered real right and “ownership” of the rights can only be changed by amending the rules. However, the body corporate needs a unanimous resolution to take away the EUA rights to a unit that was created in terms of the management rules, but only needs a special resolution to take away the EUA rights to a unit that was created in terms of the sectional title plans!
There you have it! Much like any legal answer, it depends on the context and the process. It is not as clear-cut as one would imagine. On one hand, the owner of an EUA created by the plans has an economic incentive; it may be alienated and dispensed with as he/she chooses. On the other, an owner of an EUA created by the management rules perhaps has a stronger right; it is more difficult to remove the right in terms of the required resolution. We therefore need to consider the necessities when deciding on the process!
Should you require any more information regarding this topic, don’t hesitate to email Karien on karienc@trafalgar.co.za or book a free short discussion with one of the Trafalgar experts by clicking here.
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About the Author:
Karien Coetzee started with Trafalgar 25 years ago as a Portfolio Manager in the Johannesburg office. Currently based in Cape Town she acts as National Property Management Consultant and deals with training and advising of all the Community Scheme Managers in Trafalgar. She is also actively involved in facilitating free online training courses that are available to anyone in the industry – focusing on Sectional Title Trustees and first time Sectional title Owners and also including an Introduction to Homeowners Association course. With a passion for the industry and a passion for educating people on the intricacies of the Sectional Title Legislation with courses, advice as well as other resources available on Trafalgar’s Training page that she regularly updates - https://training.trafalgar.co.za/.
This article was edited by Peter Mennen | Head of Legal and Marketing - Trafalgar Property Management