Strata Title Exports to [and Imports from] South Africa
or, a guest writer's strata musings ...
[a 12:50 minute read, with 2523 words]
Introduction
In this guest-writer article by Fausto Di Palma, he explains and discusses how Australian strata title got exported to South Africa, has evolved there over 50 years, and might now be imported back here.
It’s an interesting perspective that highlights a few unique overseas developments, including two of my favourites: the South African Strata Ombudsman and how banks are more actively involved in strata building operations. And, it demonstrates how strata title may be one of Australia’s greatest [unsung] exports.
June 12, 2025
Francesco …
FOLLOWING THE LEADER: How NSW Shaped Sectional Title Law in South Africa
by Fausto di Palma
Charles Caleb Colton said, “Imitation is the sincerest form of flattery”.
But in the world of law making, it's also the shortcut to revolution. Especially when countries peek over the fence, spot a good idea, and think, “We’ll have what they’re having.”
Cross-border legislation isn’t just policy tourism; it’s the starting point for serious reform. So, let’s unpack how this legal copycatting actually drove change and could keep doing so for strata title law in a comparative journey into how New South Wales laid down much of the groundwork for what later became South Africa’s sectional title regime. From titling innovations to dispute resolution models, South Africa’s statutory landscape for shared ownership owes a significant debt to the legislative foresight of NSW.
This article does not merely draw parallels, though. It acknowledges lineage – and invites reflection on how legal models evolve and influence one another, across borders and contexts. It reflects on how one jurisdiction’s legal innovation inspired another’s, and where the paths have since diverged. What can each jurisdiction learn from another?
South Africa’s sectional title regime, as it stands today, is a testament to legislative borrowing, legal ingenuity, and structural or practical adaptation. And much of the borrowing came from NSW and Singapore (Singapore’s also came from NSW).
This is not simply a case of legal mimicry, though. It is a story of how two very different countries – each with their own housing crises (and there is still a housing crisis in both countries), regulatory challenges, and developmental pressures – found overlapping solutions in the management of shared property. From the introduction of the Strata Titles Act 1973 (NSW) to the more recent Sectional Titles Schemes Management Act 2011 (South Africa), the parallels are striking. But what and where are the differences?
This article offers a side-by-side journey through the legislative evolution of sectional title and strata law, while comparing some of the practical outcomes South Africa experienced.
1. The Debt of Origin: NSW’s Quiet Revolution
As South Africans wrestled with the housing challenges of the 1960s and 70s, Australian lawmakers were already laying the foundation for modern strata law to solve their own housing challenges. NSW introduced the world’s first strata title legislation – the Conveyancing (Strata Titles) Act 1961 (NSW).[1] It was a radical departure from company title and shared ownership schemes.
This innovation quickly spread across Australia and beyond.[2] South Africa’s own journey formally began a decade later, with the Sectional Titles Act 1971, which only came into effect in 1973.[3] The similarities were not accidental: the South African Act drew extensively on NSW’s early framework.[4]
The notion of fractional or sectional property ownership was first addressed in the South African Parliament in the early 1950s. After that, a commission of enquiry was appointed in 1970 specifically to investigate the topic, and that commission worked “with great expedition and recommended in its report to the State President in 1971 that the Sectional Titles Act be drafted.”[5]
2. Second Generation Statutes: From Blueprint to Rebuild
As schemes became more complex, both jurisdictions overhauled their laws. NSW’s 1973 Act and South Africa’s Sectional Titles Act 1986 (effective 1988) reflected a deeper understanding of the management, registration, and financial challenges of shared property ownership.
The 1986 Act in South Africa introduced improved registration procedures, clarified exclusive use areas, and addressed some additional voting and management processes. Yet, its biggest weakness remained: it still combined sectional title registration with scheme governance – a flaw that NSW had already begun correcting and packaging separately. This distinction set the stage for a more pronounced divergence in how each jurisdiction would approach future reforms.
3. Third Generation Divergence: Separating Management from Registration
Where NSW led decisively (again) was in separating registration from management. In the 1990s, NSW divided its law into two core statutes:
(i) The Strata Schemes Development Act (creation and title), and
(ii) The Strata Schemes Management Act (governance and dispute resolution).
South Africa eventually adopted the same model – though only thoroughly in 2011, with implementation of the effective dates of the third-generation statutes in South Africa delayed until 2016. The Sectional Titles Schemes Management Act 2011 now houses many of the governance provisions previously found in the registration-focused statute (the Sectional Titles Act), as well as some new ones.[6] This change has arguably created more accessible legislation. The average person who lives in a sectional title unit or owns a sectional title unit as a home or investment does not get concerned with the complex technical registration requirements to apply for and open a sectional title register that a developer must get to grips with. But what else changed – particularly in the day-to-day management of schemes and how disputes are resolved?
With South Africa’s third-generation legislation came a pivotal institutional reform: the establishment of the Community Schemes Ombud Service (CSOS). This statutory dispute resolution body was introduced alongside the Sectional Titles Schemes Management Act 2011 and became operational in 2016. While it has already been fraught with allegations of graft and frequent leadership changes, teething issues in registration of schemes and dispute resolution mishaps, the aim was progressive – to provide accessible, affordable, quick and efficient, specialised adjudication for shared property disputes. Up until its introduction, private arbitration and the courts were the only fora to get resolution, and approaching dispute resolution through those channels is expensive.
The creation of CSOS has not simplified matters across the board. Instead, it introduced a new layer of procedural complexity, particularly when it comes to reviewing or appealing decisions that leave some parties dissatisfied. Questions about jurisdiction, consistency, and finality have clouded what was meant to be a more efficient system of resolution.
Let’s now turn to some of the more detailed aspects of South Africa’s CSOS, which operates to serve a similar function to NSW’s Civil and Administrative Tribunal (NCAT) but operates in a different legal, administrative and socio-economic cultures.
4. The Community Schemes Ombud Service: Promise, Problems, and Potential
Positioned as a low-cost, accessible tribunal to resolve disputes in sectional title schemes, homeowners’ associations, and other community schemes, CSOS was designed to offer an alternative to expensive arbitration and protracted litigation in the courts.
At its best, CSOS represents a significant shift in access to justice for residents in shared living environments. Disputes over levies, maintenance, governance, and enforcement of rules – once the exclusive domain of private attorneys and civil courts – can now be heard by an adjudicator in an administrative forum, without legal representation being mandatory and with no filing fee for complaints.
In practice, however, the implementation has not always lived up to the legislative intent.
Accessibility is commendable – there are no fees to lodge or pursue a complaint – but the service is hampered by backlogs, unclear timelines, and delays in issuing rulings.
Adjudicator quality is mixed, with some well-reasoned, fair decisions on record and others that suggest a lack of legal or industry expertise.
Enforcement remains a weak point – CSOS orders are deemed to carry the status of a Magistrate’s Court or High Court order in South Africa, but in reality, they often require further court intervention to enforce – especially when met with non-compliance, which ends up being expensive anyway.
There is currently no internal appeal mechanism within CSOS. Appeals are limited to questions of law, and often a common law judicial review is easier to conduct in the High Court – procedures that are time-consuming, costly, and inaccessible to most scheme residents, trustees or managing agents. This undermines the original promise of swift and affordable resolution.
NCAT, while more structured, is not without procedural rigidity and cost barriers. Contrary to what some South Africans may think, even NCAT sometimes hands down unpopular or wrong decisions that are reviewed and set aside by higher judicial bodies on appeal. This is a reminder that no adjudicative body is perfect – but CSOS must still strive for greater consistency, transparency, and legal integrity in the decisions it issues, if it is to restore public confidence and fulfil its mandate as a meaningful access point to justice in community schemes.
Over time, CSOS has evolved into a dual-function entity: part regulator, part tribunal. While it certifies scheme governance documents and adjudicates disputes, it also carries an educational, oversight, and transformation mandate—one that may be too broad given its current funding, staffing, and administrative capacity.
As an entity falling under the Department of Human Settlements (i.e. Housing), CSOS is not just a neutral administrative body; it is also subject to political and policy directives tied to South Africa’s broader housing and transformation agenda. This includes an explicit push – championed by CSOS leadership – for greater transformation within the community schemes industry, aiming to open up what has historically been a white-dominated sector to broader participation by black South Africans, in line with official government policies on equity, empowerment, and inclusive economic growth.
The intensity and direction of this transformation agenda have varied over time, depending on administrative leadership and political priorities, but it remains a recurring theme in CSOS publications, stakeholder engagements, and strategic planning documents. This layering of technical governance with socio-political objectives adds further complexity to CSOS’s already ambitious mandate – and sometimes blurs the line between regulatory enforcement and ideological advocacy.
Let’s now turn to other legislative features in South Africa that are worth highlighting.
5. Financial Prudence and Levy Enforcement
One of the more sophisticated tools in South African law is the embargo provision in section 15B(3)(a)(i)(aa) of the Sectional Titles Act. It prevents the transfer of a unit unless levies are paid or secured.
NSW takes a different route: buyers and sellers are jointly and severally liable for unpaid levies, and these are typically recovered through the conveyancing process prior to settlement.
This method may be more efficient, but it assumes high levels of integrity and cooperation within the conveyancing ecosystem. In South Africa, such trust is lacking.
The current structure and digitisation level of the South African Deeds Office would not easily accommodate a NSW-style model. Without systemic reform and real-time transactional oversight, relying on parties to resolve levy clearance in the background would open the door to fraud and misrepresentation. In contrast, the embargo provision—though procedurally burdensome—is a necessary safeguard in this environment.
6. The Mortgagee’s Mandate – Rights and Influence of Bondholders
South African sectional title legislation gives mortgage bondholders a strong voice in sectional title governance. This is not mirrored in NSW.
Bondholders enjoy significant rights, including notice of meetings, rights to vote on special or unanimous resolutions, and rights to approve amendments to rules (like by-laws) affecting their interests.
Bondholders in South Africa may:
Request and receive insurance documentation.
Withhold or give consent for alienation or extension rights.
Apply for appointment of administrators (like compulsory strata managers in NSW).
Apply for winding up of the body corporate / owners corporation (after deemed or physical destruction of the scheme).
Attend general and trustee (strata committee) meetings, receive notices, and inspect records of the body corporate.
Demand appointment of a managing agent if holding bonds over 25% of sections / lots.
Require specific insurance coverage if holding more than 25% of mortgage bonds.
In NSW, such wide-ranging rights are not standard unless the mortgagee is also the registered proprietor or holds voting rights by proxy.
These rights are, on paper, extensive and designed to allow mortgagees to protect the financial and structural integrity of the schemes in which they are materially invested. However, the practical reality is more sobering. In many schemes – particularly those in distress – the absence of bank involvement is conspicuous and consequential.
Sadly, in some schemes – especially those in financial distress or where management is weak – banks often fail to exercise these rights. Their absence is most acutely felt where their involvement could help avert collapse. This is particularly true in South Africa’s decaying inner-city sectional title schemes, where unpaid levies, neglected maintenance, and administrative failure have resulted in deteriorating living conditions and plummeting asset values.
This issue is explored in detail in an article published by Sectional Title Solutions (Pty) Ltd in December 2024 and is worth a read – Do Banks Have a Responsibility for Levy Contributions? A South African Perspective.
The article reflects on how banks – despite holding real rights in many units through mortgage bonds – often remain passive stakeholders, even when the schemes in question are structurally reliant on their active participation.
A legal framework is only as effective as the will of its stakeholders to use it. Where bondholders disengage, the legal safeguards may offer cold comfort to the trustees and owners left behind to manage the fiscal fallout.
7. Sustainability and Innovation
NSW’s legislation includes express authorisation for sustainability infrastructure, such as solar panels or electric vehicle charging points. This makes it easier for owners’ corporations to adapt and invest in environmentally conscious upgrades.
South Africa lacks a similar enabling provision. This leaves many bodies corporate stuck in legal grey areas, unsure whether they can lawfully approve such installations.
(See: “Solar Lessons from Sydney: Why South Africa Should Borrow NSW’s Sustainability Blueprint”)
Lessons Beyond the Blueprint
South Africa’s sectional title journey is deeply entwined with the legal experiments of NSW. From spatial definitions to institutional architecture, from levy enforcement to dispute resolution, the echoes are unmistakable.
But imitation alone is not enough. The challenge now is not to merely copy, but to critically adapt. South Africa must tailor its community scheme governance to the conditions, crises, and capacity realities of its own society.
A statute may reflect foresight. But unless it also reflects lived experience, it remains just that: a text, not a tool.
Turning the Mirror Around: What NSW Might Learn from South Africa
If South Africa has borrowed extensively from NSW in shaping its sectional title framework, it may now be time to consider what NSW can learn in return.
One such area is the deep statutory and practical integration of banks in scheme governance. While South African law gives banks clearly defined participation rights, consent powers, and oversight mechanisms – particularly where large-scale decisions are made – NSW’s equivalent protections are far more limited or indirect.
In an era where financial institutions are often among the largest stakeholders in strata-titled property, their disengagement can be just as harmful as their overreach. South Africa’s model, while not perfect in execution, offers a blueprint for how lenders might be harnessed not just as financiers, but as stakeholders in scheme health – with both rights and responsibilities.
And if imitation is flattery, perhaps mutual inspiration is the more mature phase of legal evolution.
June 12, 2025
Fausto Di Palma
[1] Andreone, F. (2011). Paddocks Press: Volume 6, Issue 7, Page 3. Retrieved from https://www.paddocks.co.za/paddocks-press-newsletter/50-years-of-australian-strata-titles/.
[2] Andreone, F. (2011). Paddocks Press: Volume 6, Issue 7, Page 3.
[3] CG Van der Merwe, Sectional Titles (Volume 24 – Second Edition, LexisNexis, 2010), paras 289–290.
[4] Van der Merwe, Sectional Titles paras 289–290.
[5] Van der Merwe, Sectional Titles paras 289–290.
[6] Van der Merwe, Sectional Titles paras 289–290.
About Fausto
Fausto Di Palma is a South African strata lawyer who has migrated to Australia and is currently requalifying to practise as a solicitor in NSW.
You can find out more about Fausto here and access Shared Spaces, his Substack, here.
 | A guest post by
|