Sectional Title Information

02/10/2024

There is new case law that allows for all cost to be recovered. The industry is standing up to CSOS who for years have attempted to limit the steps that a Body Corporate can take against delinquent debtors.

17/12/2023

REASONABLE LEVY INCREASE

For those hoping to negotiate a more reasonable levy increase, below are a few ways to ensure you have all the relevant facts together to make a more compelling argument.

Review the complex’s financial statements

With Sectional title units, there is an administration levy and the reserve fund levy. The administration levy can be increased by up to 10% with the trustees instruction prior to the AGM. If it is bigger than 10%, it needs to be approved at the AGM.

The Reserve Fund levy is determined by the 10-year maintenance plan for the complex. This plan is proposed to the owners at the AGM. Trustees review the 10-year plan before year-end and approve/amend the plan before the AGM.

According to the STSMA, one of the cases in which a body corporate is not obliged to increase levies is if the reserve fund at the end of the financial year is equal to or more than the levy income generated during that year.

On the other hand, if the reserve fund is less than 25% of the levy income, the body corporate must make provisions so that they can provide for a reserve amount equal to 15% of the levy income for the new financial year. This means that levies can be increased by 15% to supplement the reserve fund if it is below 25% of the total levy income.

When the reserve is between 25% - 99% of the levy income in that year, the body corporate should only make provision for a reserve amount equal to the repairs and maintenance items provided in the new budget. Simply put, they can increase levies by enough to cover the required repairs and maintenance to the common property that has been budgeted for within that financial year.

26/11/2023

Can body corporates reduce levy figures?

A judgment in the KwaZulu-Natal High Court shed some light on this topic as far as it relates to a reduction of levy figures due to the body corporate of a sectional title scheme.

In the case of Zikalala v Body Corporate of Selma Court, the court considered the question of whether the trustees of a body corporate had the authority to accept a reduced amount as full and final settlement of an owner’s arrear levy figures. In other words, can the seller ask for reduced levy figures, and can the body corporate legally reduce the levy figures?

In the Zikalala-case the owner owed about R58 000 in outstanding levies, interest, and legal fees, but only offered R30 000 as full and final settlement.

The court referred to section 3 of the Sectional Titles Schemes Management Act, 8 of 2011 (“the Act”) which obliges body corporates to collect levies from owners. The court further referred to Management Rule 25, which also obliges body corporates to collect interest on arrear levies, as well as reasonable legal fees incurred by the body corporate in collecting the arrear levies.

The court held that neither the Act nor the Management Rules permit a body corporate to compromise on its obligation to collect levies or contributions. In other words, a body corporate is not empowered to accept a settlement offer of a lesser amount than what is owed to it.

The court also relied on a 2003 case, Body Corporate of Fish Eagle v Group Twelve Investments (Pty) Ltd wherein the High Court decided that a resolution taken by trustees to stop legal action against an owner, and rather settle the matter, was invalid. In the Fish Eagle-case, the court also underlined that a body corporate has no power to pass a resolution to the effect that it will not carry out one or more of the duties imposed upon it in the Act.

In summary, the collection of levies is a statutory duty placed on body corporates, which duty cannot be circumvented. This statutory duty entails collecting the full amount of levies and contributions due, together with interest and legal costs. No latitude is afforded to trustees of a body corporate to deviate from this obligation.

The effect of these judgments is that body corporates are legally not allowed to provide a discount on levy figures or writeback on the interest. If you are, therefore, faced with a transaction with a shortfall on the seller’s side, approaching the body corporate to reduce the levy clearance figures will, unfortunately, not help.

You can contact our offices for assistance on any body corporate matters.

07/10/2023

22/08/2023

Compliance ... ‼️‼️

Trustees in community schemes in South Africa are personally liable for more than they think, legal experts warn.

11/08/2023

It is the duty of the person that pays levies to make sure they use the correct reference numbers.

The Managing Agent can not magically know what payments are for which unit without a reference number.

It is your duty, just like with any other account, to see that your account is not running into arrears if you failed to use the required information on your statement.

19/07/2023

Get the order‼️

Body corporates should go to court when more than R20 000 is owed in arrear levies and electricity charges. A court order to disconnect the electricity is the best way to recover what is owed by the defaulting owner.

12/07/2023

Can the trustees make this decision and pass this interest resolution without holding a SGM/AGM? Is this interest rate exorbitant?

Yes, PMR 21(3)(c) allows the body corporate, on the authority of a written trustee resolution, to charge interest on overdue amounts. It limits the amount of interest it can charge and links this limit to the rate recoverable under the National Credit Act, compounded monthly in arrear. The maximum rate of interest is currently 2% per month, i.e. 24% per annum so the trustees proposed increase is the maximum amount of interest that can be charged.

The trustees can take a written resolution increasing the interest rate from 12.25% per annum to 24% per annum without holding a SGM/AGM

22/06/2023

Now that load shedding has become a regular part of the South African experience, trustees in sectional title schemes are having to deal with an increasing number of applications by owners to install solar panels on ‘their’ roofs. Of course, these areas are common property, owned by all members of the body corporate, so it is necessary to give owners exclusive use rights to rooftop areas before they can be allowed to install solar panels.

Is it possible to set up exclusive use areas for all owners in terms of one rule, so as to avoid the necessity to deal with a stream of individual applications and the risk of having exclusive use areas granted on different terms to different owners in terms of different rules.

The suggestion is that the members of the body corporate at a general meeting pass a special or unanimous resolution to make a rule (under section 10(7) of the Sectional Titles Schemes Management Act of 2011) giving all owners exclusive use of the roof space above their sections and the right to install their own solar panels on these areas, under the supervision and control of the trustees.

The sensible suggestion is that such a rule should cover, among other issues:

Specific positioning of the panels on the roof

Maximum number of panels that may be installed (to take account of the size and occupancy of the section)

Generic design of the solar panels (catering for various “models” available from a variety of suppliers and installers)

Installation technique

Certificate of Compliance

Maintenance of the installed panels and the roof area covered by the panels

Accountability and indemnity in respect of body corporate damages, injuries and losses, etc.
Insurance – (owner’s insurance policy or body corporate’s)

In addition, we suggest that the rule should allow the body corporate and its agents to access the exclusive use area for inspection, and give it the right to require that the equipment be removed if it falls into substantial disrepair and the owner refuses or fails to address the problems.

02/11/2022

New laws was send for signature

Parliament has passed the Sectional Titles Amendment Bill and sent it to president Ramaphosa for assent.