Sectional title members who complain most about levy increases and the performance of their trustees are often also conspicuous by their absence at the body corporate’s annual general and other meetings, says Lanice Steward, MD of Anne Porter Knight Frank.
“I am told that almost one third of South Africa’s sectional title schemes have financial problems – and in most cases the trustees are blamed for this, particularly when they have allowed some members to default on levy payments.
“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 volunteers.”
She says body corporate members also often fail to recognise and accept the financial realities of sectional title schemes. These are that the body corporate has 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 rise each 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 members who don’t pay their levies – no matter what their complaint or problem – are acting contrary to the law and are liable for their arrears and for compound interest charge on them.”
Sectional title schemes with unhealthy balance sheets are often red-lined by the banks, making it impossible for new buyers to get bonds to buy units in the complex.
“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,” says Steward.
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