Although it is sometimes alleged that the trustees of sectional title schemes lack the power to enforce the Sectional Title Act, this is far from being the case, says Michael Bauer, general manager of IHFM.
This is particularly true when it comes to the collection of levies and contributions from owners in accordance with the provisions of Rule 31.
“It should be noted by sectional title owners who are slow in meeting their payment obligations that sub-rules (5) and (6) of Rule 31 make them liable for all legal costs involved in the collection of unpaid levies or other sums in arrears as well as any legal costs incurred in getting owners or their tenants to abide by the body corporate’s rules.
“Also, the sub-rules specifically allow the trustees to charge interest on arrear amounts at a rate which it is in their power to determine.”
Rule 31 (6), says Bauer, permits the trustees to charge interest on the unpaid levies and on the unpaid interest, so it condones charging compound interest on arrears levies.
Bauer has on several previous occasions warned trustees that if a body corporate gets itself into a position where a significant proportion of its owners are behind in their levy and other payments, there is a danger that the entire project will lose value.
“Well managed sectional title complexes collect their levies on time and build up reserve funds which enable them to handle large (and sometimes unforeseen) repair and maintenance outlays without calling for special levies or having to raise loans.”
Section 37 (2) of the Sectional Title Act states that sectional title levies are payable immediately following the passing of the resolution by the trustees of a body corporate, says Bauer. This is usually taken to mean 14 days after the annual general meeting in the case of the ordinary levies.
“The due date, amount and payment form of levy contribution is usually the most important resolution that trustees will pass in any given year, and it will very often be the one most debated by body corporate members, even though once their trustees have agreed to it, they have no right to object,” says Bauer.
The Sectional Title Act makes provision for the trustees to take court action against any sectional title owners who don’t pay their levies promptly.
He says one important fact regarding this matter that should be clarified is that the levy is the responsibility of the person who owns the unit on the day the resolution is passed by the trustees. Unit holders who were about to sell their units have sometimes argued that increased or special levies should be paid by the new owners. But, although this is understandable, it is not what the sectional title act states.
“Special, or increased, levies should not be resented by members as it is through these that their properties can be correctly maintained and thus increase in value,” says Bauer.
Call Michael Bauer on 083 255 4442 or visit www.ihfm.co.za.
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Good day,
I own a property and pay my monthly levy in the month concerned. The payment terms are to pay in advance /the first of each month for the month. If not I get charged interest. I normally pay at the end of the month for the month with the interest included, never allowing the account to go into arrears. I have a couple of questions.
1. How can I be charged interest on an account that is due in advance?
2. It is the first time that I am being charged for a reminder letter, even though I pay my account in the month that it is actually due (may not be in advance, but it is paid in the month which it is for plus the interest), why do I all of a sudden get charged for a reminder, which should normally be done once the account is in arrears for more than one month?
3. I have been paying a special levy (R350 p.m) for over a year. My account is always up to date but there seems to be no end to this special levy. Originally told it was for painting however I pay a normal levy of R532.40, not sure what this covers for?
Regards
Robert Mathews
Hi Robert,
Thanks for your email. The trustees resolve 14 days after the AGM how the levy is payable, i.e. on the 1st in advance net of transaction fees. They also resolve the interest rate payable on arrears levies. You need to ask for those resolutions. If they do not have those resolutions, the levy cannot be late and they cannot charge interest.
W.r.t the reminder letter, I am sure why this was issued. Who issued it and are they are registered as debt collector?
The special levies should be due as a once off. You have to ask for the resolution and/or minutes of the trustee meeting in which they were resolved. Also, it should define the purpose of the levies.
Hope this helps.
Michael