An overview of sectional title levies

Sectional title funds

In terms of Section 37(1) of the Sectional Title Act, 95 of 1985, a body corporate of a sectional scheme is required to establish an administrative fund which is used to pay for the upkeep and servicing of the scheme. In addition, the body corporate is entrusted with establishing a reserve fund. This additional fund serves as a safety net should there be a need for costly or unforeseen maintenance.

Should further costs arise (for example if there is damage caused by a storm) that cannot be covered by the available funds, a body corporate is entitled to raise a special levy to cover these costs.

Who pays – body corporate or owner?

The overarching rule is that a body corporate is responsible for maintaining the common property in a state of good serviceable repair. This includes ensuring the exterior of the building, roofs, walkways and gutters are well maintained. Each owner, on the other hand, is traditionally liable for the good upkeep and maintenance of the interior of his or her unit as well as any exclusive use areas.

It is worth noting that the obligation to pay levies is absolute and an owner may not withhold payment due to certain maintenance being neglected. For example, if a body corporate has failed to deal with a water leakage causing increased water bills for owners, the regular levy should still be paid and the costs incurred as a result of the negligence should be documented and then claimed from the trustees of the body corporate.

Non-payment of levies

Should a sectional title owner find themselves in a position where they are unable to pay the monthly levy or a special levy raised, this should be brought to the attention of the body corporate and the trustees in order for an appropriate resolution to be found.

Failing to do this, and subsequently failing to meet levy payment deadlines will find an owner in a difficult situation in which a letter of demand will be sent for the payment of outstanding levies, providing the owner with no less than 10 days to meet the demand.

If payment remains outstanding, the matter may be handed to attorneys who will in turn inform the various credit bureaux, obtain a warrant of execution to attach movable property, file for liquidation or sequestration, or obtain a court order to attach the property and sell it in execution.

The owner may contact the Ombudsman or National Credit Regulator for assistance, however, if this is unsuccessful, the owner will be advised to sell the property to avoid the legal action mentioned.

As is so often the case, it is best not to wait for legal consequences, but instead to request assistance in order to come to a mutually acceptable agreement.

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Written by Wessel de Kock

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