Those sectional title members who complain most about levy increases and the performance of their trustees are often also absent at the body corporate’s annual general and other meetings.
“I am told that almost one third of South Africa’s sectional title schemes have financial problems. In most cases the trustees are blamed for this, particularly when they have allowed some members to default on levy payments,” says Lanice Steward, MD of Anne Porter Knight Frank (APKF).
“Body corporate members seem to forget that the trustees are also ‘shareholders’ in these schemes, that they face difficult challenges and that their fortunes are also linked to the success or failure of the scheme. It is also often forgotten that they are unpaid voluntary workers.”
Body corporate members, added Steward, also often fail to recognise and accept the financial realities of these schemes. These are that the body corporate (BC) does have general insurance, maintenance, gardening, electricity and other expenses, over and above those paid by members on their units, and these have to be paid for by the levies.
“Members often also do not accept that these costs – especially electricity – rise year by year, and that levies have to rise in line with them.
“Sometimes the reaction to the inevitable levy increases is so negative that members default on their payments. Those doing this should take note that a new High Court ruling has laid it down that any member who does not pay his levies, no matter what his complaint or problem, is acting contrary to the law and is liable not only for his arrears but also for a compound interest charge on them.”
There are, said Steward, few things less welcome in the property sector than a sectional title scheme which has an unhealthy balance sheet and is red-lined by the banks – making it impossible for new buyers to get bonds to purchase into it.
“All body corporate members should, from day one, be involved with their trustees’ affairs and ensure that they are keeping the scheme on a safe path – paying their debts, maintaining the complex and ensuring that it is secure. If this is done, the value of their sectional title units will appreciate fast because it is in this category that demand for the next decade will be strongest.”
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