How is my Garage Insured?

In a sectional title environment, the garage and insurance goes to the heart of exclusive use areas; it can raise many questions when owners are unfamiliar with the different ways a garage may be registered or allocated.

Often, when an owner buys into a residential complex where garages are allocated to a section, the expectation is created at the time of sale that the owner buys the garage as well, and that the garage belongs to the section purchased. The assumption further arises that the owner may do within the garage whatever he/she wishes to do, without the consent of the trustees.

What the owner does not realize, is that ownership of the garage or the owners’ rights will depend on how the garage was registered or allocated.

To explain:

The garage may be registered as a section or form part of a section, i.e. fully owned by an owner or alternatively it may be an Exclusive Use Area (EUA) garage. This means that in reality it is common property but someone has exclusive use rights over that area or garage.

The garage may just be a common area garage without exclusive use rights but we will exclude this from discussion for now; as such, a garage is common property and should be treated as such.

Usually, the EUA will be registered on the sectional plan or allocated in terms of the rules. Therefore, in summary:

Section garages – either shown separately as a section or form part of a section

Common property garages – Usually EUA garages, either one of:

  1. EUA registered, i.e. shown on the sectional plan
  2. Allocated in terms of the rules: per the rules and usually a diagram filed with the rules

Strictly speaking, as legislation deems exclusive use to be part of common property, the owner needs approval from the trustees to have alterations done to the inside of the garage, as much as he or she need approval to alter the balcony not forming part of the section, or when an owner wishes to install a swimming pool or hot tub in the exclusive use area allocated to his or her section.

Therefore, garages can only belong to the owner if the participation quota includes the garage area and the levy is calculated accordingly.

Insurers need to be advised if garage use changes where the risk increases. An example is where a garage is used as a workshop or becomes a business outlet, e.g. a fish and chips takeaway shop.

When the Schedule of Replacement Values (SRV) is prepared, an EUA garage is reflected as a part of the common property rather than part of a section. Owners often ask why there garages are not shown in the schedule as they think it may have been an oversight. To avoid confusion, the SRV should show the EUA garages as a separate common area line item and this should be explained to the owners in a note on the SRV or at the AGM.

CLICK HERE for an example of a SRV showing the SRV as a separate line item.

 

Authors: Rian Pienaar and Mike Addison

Contact Addsure – The Leaders in Sectional Title Insurance – to get fit and proper advice from advisors who understand sectional title. Contact us in Johannesburg on (011) 704-3858; in Durban on (031) 459-1795 and in Cape Town on (021) 551-5069