An often unpopular kind of levy is called the special levy. If essential emergency repairs are required within a scheme for which there are no reserves, the trustees are able to raise a special levy to finance such repairs.
This form of levy is often seen negatively by the owners and mainly comes about from deferred maintenance, lack of proper financial planning, inadequate budgeting or poor general levy collection. It is therefore obvious, that raising a special levy places all owners under additional financial pressure and may deter potential purchasers from buying into the scheme.
It is important to know that the trustees have the power to raise a special levy, without any authorization by the members as it their responsibility to maintain the scheme.
Owners naturally want to keep levies low. But it is in the best interest of every owner’s to scrutinize the levy budget before approving it, to ensure adequate provision is made for future scheduled maintenance and unexpected emergencies.
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
Too much power is given to trustees. I am dealing with a situation where there isongoing increases of levies + unauthorised special levy for painting a neglected 5 year old complex. Most residents are investors and pay up, whilst there is proof of trustees mismanaging funds and employing their relatives who receive extremly good salaries. Sectional title legislation was designed to enrich attorneys, managing agents and trustees. Please do not respond by saying that owners can enter into arbitration – attorney fees are exhorbitant.
Hi Poonitha,
Thank you for your email. The power given to trustees can be restricted at each every AGM by giving trustees restrictions and directions as per rule 39 (1). Arbitration is not that expensive and does not require attorneys at all. Give the Association of Arbitrators a call. Arbitration can start from R2,000 and is final and can be made an order of the court.
By sounds of it, you should get rid of those trustees sooner than later. Get 25% of the owners together, call a special general meeting and vote in new trustees.
Hope this helps.
Michael Bauer
Hi Michael,
Many thanks for this valuable bit of info.
The managing agent and trustees refuse to divulge the contact details of all owners, most of whom are investors and not resident in the complex. So the few of us have failed to get 25% of owners together.
It would be excellent if we could have a website where managing agents and other sectional title service providers can either be complimented or shamed. This would serve as a good resource for schemes that are looking out for cost-effectives and competent service providers, eg, painting or plumbing contractors.
Thank you for a reader-friendly site. I will keep you posted on our outcome.
Poonitha
Dear Poonitha,
Thanks for your positive feedback. I did not say it would be easy. We cannot offer you this service, but you can complaint to NAMA or the Institute of Estate Agents(provided he is member) or the EAAB (usally they deal with fraud, misconduct, etc and not operational performance). You can however use for instance hellopeter.com to complain.
I suggest you obtain a copy of the deeds register from the deeds office. This I think entails names, physical address and postal address, and maybe a phone no. At least a starting point.
Thanks again and please share your experience (good or bad) with us.
Michael
Is there a limit to the Special levy amount the body Corporate is allowed to collect?
We are currently paying a levy of almost R 1500.- per month and have just been told that for 72 units the outside painting needs to be done at a contract value of
R 850000.- The special levy will now be an extra R 984.- per unit and collected over a 12 month period. This means that we each have to pay R 11808.- extra per year. I can not afford to pay this. Have they got the right to ask for such large amounts?
Thank you, Renate
Hi Renate,
Thank you for your email. Well, the trustees can raise levies and there is no limit to the amount. However, they have restrictions in terms of for what they can use the special levy. In other words, they would require a majority or special resolution first from the owner to undertake the maintenance or improvements and then as a result of the approval given at an general meeting, may raise a special levy for that purpose.
If that was not done, then they can’t raise the special levies. If it was done correctly, then they can since the owners by majority or special resolution approved the planned maintenance or improvement.
Hope this helps.
Michael
Hi Michael,
Thank you for clarifying this. in order for this special resolution to be approved by the owners during a meeting, what would be the quorum out of the 72 owners?
The meeting was held when I was out of town and all the neighbours I have spoken to so far, were unable to attend this meeting and are disagreeing with the amount of this special levy.
Thanking you in advance
Hi Renate,
Thanks for your reply. They need to give 30 days notice and need 20% quorum in value and numbers. The special resolution requires 75% of the 20% quorum.
Hope this helps.
Michael
Yes thank you very much for your assistance with this.
Kind regards,
Renate
Hi Michael,
Wondering if you are able to offer some advise. At our AGM held in June month, the subject of maintainence of our complex was brought to the table. Based on Durex quote received, we were advised that it would cost around R500,000.00 to paint and do repair work and it was agreed the Trustees would meet to assess additional quotes received and come up with a proposal with regards to a special levy to fund this. The timeline was loosely discussed although no time-frame was agreed on.
I then received a letter dated 5/07 advising of special levy that was agreed on by Trustees which amounted to approximately R16,250.00 per unit and needed to be paid over a 6month period beginning 1/08/2011 and ending 1/01/2012.
I put in writing the fact that my current situation prevents me from being able to pay this amount in required time and I asked for suggestions or alternative arrangements to be offered to me. I received no reply but was sent the levy statement for Aug month on 16/07 which reflected levy amount owing including special levy. Now I do realise Trustees cannot be restricted, but my levy has increased from R1044 to R3,943.49 which is steep based on my current situation. I was under the impression that in instances like these the Trustees had to notify owners of their intention and allow for owner feedback before enforcing a special levy. The fact that my request was also ignored feels like a major violation of my rights so was just wondering if you could advise as to whether proper procedures were followed and what my rights are in this instance?
Many thanks,
Candice
Dear Candice,
Thanks for your email. Well, the problem is that the trustees can unless otherwise directed or restricted according to rule 39 (1) by the owners at the AGM, they can raise a special levy.
A further restriction is however, the trustees need to notify the owners of any major repairs or maintenance by giving 30 days written notice to the owners outlining the purpose, the need, the funding. If no owner respond, then they may proceed. If owners respond, then they have to call a special general meeting.
In other words, the investment decision and the finance decision are 2 separate decisions.
Once the owners approve the proposed maintenance, then the trustees can raise a special levy as they see fit, again, unless otherwise directed.
It sounds to me, that the maintenance project was not approved correctly and in addition you should have directed/restricted the trustees at the AGM not to be able to raise a special levy without owners consent.
It appears they simply raised the special levy anyway and only allowed for one option to pay, i.e. monthly.
Also, you need to consider that you live in a sectional title scheme, so you are forced to accept majority decisions even if you don’t like them or cannot afford them.
This being said, although they have not done everything correctly, you will still face the special levies once the trustees sorted out the process.
Hope this helps.
Michael
Hi Micheal,
I am an investor and special levies was paid over to the Management Agency for the upgrading of the complex. I requested official written quotations form the various contractors [which the Management Agency post to me] as the investment property is located in a different city as to where i stay.
Part of the upgrade was the upgrading of the security main entrance door. It has come under my attention form my tenant that (1) yes the contractors did come and upgrade the main entrance but has failed to work as promise in quotes. Management Agency also confirmed that the upgrade was done and admitted that the system was vandilized and not working [for what we as the owners paid for] till this day and that they are a waiting a insurance claim. These special levies was paid over 3 months [Dec 2010, JAN & Feb 2011.] They did not inform me as the owner of this situation and i have been paying my monthly levies every month.
Do we as the owners just keep on paying the monthly levies while clearly an aspect of the upgrading of the complex has not be done???
Many Thanks
Graham
Dear Graham,
Thanks for your email. Frankly, the trustees and the managing agent have not managed this contract properly. I hope that the trustees have not authorised the payment if the work was incomplete, i.e. made only a deposit rather they paying everything.
I suggest you contact the trustees in writing via the managing agent and demand a written explanation about the state, situation, issues, and the way forward. I would have expected the trustees to communicate with the owners after experiencing difficulties. Let’s face it, trustees are human and they make mistakes as well as they are volunteers, so things can go wrong.
You have to pay the special levy and continue paying the ordinary levies. If the trustees do not respond or do not deal with the problem on hand, I would refer to prescribed management rule 53 and call an SGM and remove them asap.
This is your investment and your funds you paid. They are entrusted and have fiduciary responsibility to uphold.
Hope this helps.
Michael
hi,
I need desperately help.I am renting for the last six years townhouse ,sectional title and i requested a original bill from municipality on so many ocasions.
Somehow i managed to get one for July’2011 and discoverd the overcharged me Ffor R 460.00.
Complex have one bill for all twelwe units and every unit have electricity meeter separate.
MY question is can they charge me the rate for the electricity they want?
regards
tanja Stosic
Dear Tanja,
Thanks for your email. No, they need to recover the actual utility charges at cost, but they can charge an admin fee. The problem is who can charge the fee, i.e. the managing agent or any third-party service provider or the trustees. In my opinion, the levies are cost recoveries and must be recovered on this basis. In other words, of the scheme is self managed the trustees cannot charge a fee as they do not provide a service and run a company for profit as the managing agent would do or any other service providers.
So, no they need to charge for the actual cost and if a third-party is reading meters they can recover that charge from you too.
Hope this helps.
Michael
Good day
I really appreciate this informative website, so thank you.
I am an owner of a unit in an exclusive complex in Cape Town. Almost immediately after taking ownership the exterior paint started to degrade considerably and within just 18 months it looked unsightly. As such the trustees want to repaint the complex.
I felt the developer should be approached to pay for the repaint because paint should last longer than 18 months and this massive expensive should not be thrust onto owners. The trustees have stonewalled this because the Chairman of the trustees works for the developer and a further three trustees are from the managing agents. Neither of the 4 own in the complex.
And as a result they are trying to push the special levy through.
As a result I tried to contact other owners myself and was told by the managing agent I am not allowed to.
Is it true that if I try notify owners that at the upcoming AGM a special levy is going to be discussed that has a large financial implication for each of us attached, I am doing something wrong?
Surely owners have a right to know what is happening and if the trustees wont communicate with owners, can we not communicate amongst ourselves to require the trustees/managing agent to take our concerns to the developer?
Regards
Jay
Dear Jay,
Thanks for your email. Usually, the builder or developer provides a guarantee for 1 year on the labour and the paint manufacturer up to 10 years. You should investigate this.
You are entitled to get a list of the owners on written application and you may contact them at any time for any reason whatsoever. You can according to prescribed management rule 53 call a special general meeting by obtaining 25% of the vote and could remove the trustees from office or imposed additional restrictions onto the trustees, fire the managing agent, etc.
Hope this helps.
Michael
Hi
According to the Body Corporate our garages needs to be demolished and replaced. I received a letter from the Managing Agents stating that the work will start on 27 September 2011 and the costs will be distributed between the people who park in these garages. My question is, can this not be claimed from the insurance? and Can this not be done from the surplus monies?
If the site plan does not reflect an enclosed patio, is it legal that special levy is raised and the omitted enclosed patios get repaired?
Dear Ana,
Thanks for your email. This is a difficult question to answer. You need to review your sectional plan and then check what use the patio is. If it was enclosed “illegally”, then the sectional plans need to be amended, i.e. refer to extension of a section and the requirements for that in section 24 of the Act.
If it would be common property or even an exclusive use area, then the trustees could raise a special levy from the owner of that patio specifically. It is possible to raise a special levy only from one owner to repairs his exclusive use area, provided ownership is clarified.
Hope this helps.
Michael
May a special levy be raised for an overdue water account if water was budgeted for in a financial year?
Hi can a special levy be raised for non-payers in a complex? say for example the complex is in arrears on the electricity bill because of non-payers, can the managing agent force you to pay a special levy to pay the arrears? thanks.
Our complex is now under new management agent since May/June. In the past two months they have added a charge called “sewerage increase” on the statement. I checked the City of Joburg website to verify what we have to pay to the managing agent/body corporate and what we pay to municipality and as far as I understand sewerage is billed directly againt the sectional title holder. Is the agent entitled to charge for sewerage?
Thanks
Hi,
Thank you very much for answering to my question! My Landlord now want me out of the property and I still dont have any proof for my electricity charges.He send me a letter from his attorney and i need to move on 31-10-2011.I dont have any attention to move our to till they provide me with electricity bills from municipality and the way how they done calculation.
I know if I move he will never refund me and give me proof how calculaction is done.
Please give me advise what I should do.I am thinking of requesting Forensic Audit ,can you advise me ,please?
Hi Tanja,
Thanks. It is a pleasure. I suggest you lodge a complaint at the Rental Housing Tribunal. You will have to pay rent while you continue staying on the property until the dispute is resolved.
Hope this helps.
Michael
Dear Kgothatso,
Thanks for your email. I am not sure if I understand you correctly. Usually, if your complex has a bulk meter, the cost is allocated according to the PQ. Therefore, I am not sure if you have separate water meters and they simply then charge the sewerage according to your consumption.
If they charge the year on year difference over and above your levy, then this is not possible.
Hope this helps.
Michael
Good Day
Please can you let me know about additional security charges.
We have 32 units in our complex, 16 are one bed upstairs units and 16 are two bed ground floor units. At the last AGM we agreed to the additional security charges to be equally split to all the owners. However the managing agent has charged the owners of the ground floor units double security cost as opposed to the upstairs owners.
Is this legallay corroect?
I am under the understanding that only levies are charged per sqm and not costs such as security, as the guard does not look after the two bed units more than the others…
Please urgently advise.
Regards
Christine
Hi Christine,
Thanks for your email. Please find my response to your first question.
Hope this helps.
Michael
Good Day Michael
Unfortunately I did not received your response…must have missed something on my side.
Please can you let me know about additional security charges.
We have 32 units in our complex, 16 are one bed upstairs units and 16 are two bed ground floor units. At the last AGM we agreed to the additional security charges to be equally split to all the owners. However the managing agent has charged the owners of the ground floor units double security cost as opposed to the upstairs owners.
Is this legallay corroect?
I am under the understanding that only levies are charged per sqm and not costs such as security, as the guard does not look after the two bed units more than the others…
Please urgently advise.
We currently received our notice of agm. Apparently a special levy will be requested due to the under recovery of electricity. Also, an under recovery for sewerage. Water pipes that leaked since 2009 also resulted in an under recovery of water. A provision for estate management is also for me under dispute. What is estate management and the administrative services will increase with 55 % due to that expense. I do not understand estate management as we have property management agency who we pay to do the collection of levies, pay the accounts etc. We paid under roverages of electricity before and I do not understand such under recoveries. Surely the property managers must reconcile every account received from the council. We all hear stories of how the council bill the accounts and how do we know that the council billed the correct units.We make use of meter readers who should also give the correct units used. It seems that we constantly pay special levies. Your input will put a lot of questions in the clear. Thanks
Hi
If at an AGM a special levy is approved by the quorum, can the managing agents or trustees decide after 1 month of implementing the special levy to stop it as the owners are complaining that they cannot afford it (but it is seriously required for maintenance), but these are of course the owners who did not attend the AGM.
If the repairs are of such a serious nature that if not repaired can cause damage or building inspector to issue a notice.
Thank you in advance.
Regards
Marco
Dear Marco,
Thanks for your email. Well, I haven’t come across a case in which the trustees wanted to stop/reserve a resolution w.r.t to special levies. I guess technically it is possible, but in my opinion they are not fulfilling their fiduciary responsibilities by not ensuring the body corporate is maintained and stays solvent.
If owners resolved at an AGM to approve essential repairs and maintenance, then the trustees were instructed and directed to undertake the maintenance.
I suggest you either register a dispute with the trustees or call a special general meeting using prescribed management rule 53 to remove the trustees and elect new ones and push through the required management.
Hope this helps.
Michael
Hi Denise,
Thanks for your email. The AGM notice is sent out 14 days prior to the AGM to allow you as an owner to question those budget items at the meeting and if necessary vote against the budget.
You are absolutely right. The trustees have the fiduciary responsibility to manage your levies at the best possible way.
Hope this helps.
Michael
Dear Michael,
I need some clarity on how levies collected for special works should be used. We have a communal water meter at our complex and the water bill is split per the units in the normal levy. I have a situation were the water/sewrage bill at our complex has increased drastically over a year without the trustees or managing agent informing any of us owners. There were special levies collected previously for work around the common property, however none of this work was undertaken and the special levy collected was used by the trustees to pay for the increased water bill without any of us being informed. They have now requested another special levy to install individual meters and for other remedial work. Who do we hold accountable for this, the trustees or managing agent, and could they have used these funds.
Regards
Rajesh Hansrajh