Real Estate 101: Multi-Residential Property vs Sectional Titles Property
Multi-Residential vs Sectional Titles Property
Botswana has various types of land tenures being State Land, Freehold Land and Tribal Land. You can own or rent either. Sometimes you may buy or rent land already developed as a multi-residential property or as a sectional title. If you ever wondered what the difference is between the 2, then this article is for you.
What is a Multi-Residential Property?
A multi-residential property is property that has multiple houses inside. That is one plot with more than one house inside. The result of which will be the one plot will have one title deed, but have multi houses inside. Imagine you buy a big plot and build several houses on it. All these houses are tied together under one title deed. This means you own the entire plot and all the homes on it. It’s great for rental income or creating a family compound.
How to mortgage a multi-residential house?
A mortgage is a loan that uses property as security for the loan. Therefore in order to mortgage a multi-residential property one will have to mortgage all the properties inside the one plot. The downside of mortgaging a multi-residential property is that all the houses in the plot will be in risk of getting auctioned if the loan is not repaid.
So when you want to mortgage a multi-residential property, remember that the loan will be for the whole plot and all the houses inside. If you need to sell, you’d have to sell the entire plot with all the houses inside.
What are Sectional Title Properties?
Sectional Title property is property that can be owned in sections. For instance in a flat with 3 floors, each floor can be owned by different people or each unit of the flats can be owned by different people. Over years this type of living has been gaining popularity particularly in Gaborone where a lot of developers are building sectional title properties. Sectional Title Properties are governed by the Sectional Titles Act.
Sectional title property should have:
- Common property – which the property that everyone in the plot share.
- Exclusive use area – which is the area that is exclusive to the owners of each section such as parking Bays, Balconies or swimming pools etc.
- Sections – being the house sections which are owned or occupied by the owner. Normally houses/units in a sectional title scheme have house numbers.
With Sectional Titles, you build multiple houses on one plot, but each house/section has its own title deed, each title deed belonging to you, to use as you please. This means you can sell, rent or even gift individual houses to different people. It’s like owning a slice of the pie instead of the whole thing.
How to mortgage sectional title properties?
When mortgaging sectional title property, the mortgage will be only for the section which the loan is for, and such loan will not affect other properties in the plot. For instance, if 1 plot has 6 sectional title properties inside, with unit 1 to unit 6. Each unit will have its own title deed. Then if unit 2 is mortgaged, it will be the only one affected. If unit 2 gets auctioned, the other units 1, 3,4,5 and 6 will remain.
Also remember that each section always has 3 parts, being the common property, the exclusive use area and the section. Therefore, a mortgage on any section will also mortgage all these 3 items with common property assumed. In some instances you may find that you have 2 titles for 1 section, being the title deed for the section and the title deed for the exclusive use area. They always go together.
Who can help me prepare or understand sectional titles better?
A sectional title is prepared by a an attorney who has been admitted to practise as a conveyancer. Remember lawyers are different, so always remember to ask them if they are conveyancers before engaging them.
In addition, you need to also consult with a land surveyor to help you draw sectional title survey diagrams for building purposes or understand sectional title plans.
Key differences between multi residential units and sectional title properties
| Type of Property | Ownership Structure | Selling Flexibility | Legal and financial implications |
| Multi-Residential | One title deed for the entire property | The entire property must be sold as one. | Simpler bonding and management but less flexibility. |
| Sectional Titles | Each unit has it’s own title deed, offering more control over individual units. | Individual units can be sold and mortgaged separately. | Requires more upfront legal work but offers greater long term flexibility. |
Should I choose Multi-Residential property or Sectional Title property?
Whether you choose multi-residential or sectional title property, both offer unique benefits. Multi-residential is great for families or rental income, while sectional titles give you the flexibility to sell, rent or bond individual units. The key is to understand your goals and work with the right professionals to make your dream a reality.
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