select
|

Debt collection in sectional titles - DIY or Professionals?

A steady income stream is extremely important for the financial health of any sectional title scheme, as payments of bills and regular maintenance is what is needed for the scheme to maintain value and be managed properly.
 
If the body corporate is unable to collect all the levies due on a regular basis, the scheme might end up with financial difficulties, which affects all the owners negatively and not just the non-payers, said Mandi Hanekom, operations manager of the sectional title finance company Propell.
 
If owners of sectional title units do not pay their levies in full and on time, they place a huge burden on the others who do pay, which is an unacceptable situation. In turn, if there is a shortage of funds, it creates a situation where the scheme might not be able to meet its financial obligations. This might mean that a special levy must be raised to rectify the situation, but it often happens that the non-payers will default on this contribution as well, leaving the paying owners to cover the amounts not coming in, said Hanekom.
 
While some owners might have genuine problems with paying their bills each month, be it a loss of income or illness, the bad news is that a plan has to be made to meet their obligations or they will have to face the consequences of non-payment, she said.
 
Unpaid levy accounts place a huge strain on everyone trying to manage those accounts, not just the trustees trying to manage the scheme but for those who are responsible for the awkward task of collecting the debt. This is where it is better for the trustees to hand the account over to a professional, whether it be an attorney or a company experienced in debt collection in sectional title schemes, as there is no personal involvement and just a carrying out of an instruction.
 
If levy accounts are handed over for collection, it will take some time for money to come in as legal processes are often lengthy. In order to assist, whether the body corporate has appointed an attorney or collections company, all the necessary information pertaining to the outstanding accounts should be handed over by the trustees as soon as possible.
 
During the course of many years in operation, Propell has seen that those bodies corporate opting to use an arrears collection service or arrears finance package has immediately helped, by alleviating the stress of trustees having to collect outstanding levies on their own. In cases such as these the company taking over the collection process often also assists by fronting the amount of money needed by the body corporate to get their scheme back in the “black”.
 
Using this option is often the better solution that trying to go through all the legal processes alone, she said, as using an experienced collections company also hands the credit risk over to the company rather than the body corporate carrying it. All the legal fees incurred are usually paid by the collections company and the interest on outstanding amounts will also be recovered from the owner.
 
“We find that managing agents and trustees possibly don’t have the time it takes to continuously follow up on the outstanding bills, but if they employ a professional expressly to do this job, they can get on with the day to day running of the scheme,” said Hanekom.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 24 Nov 2017
      Demand for secure estate living in Hout Bay has risen sharply in recent years, precipitating a spike in development with estate homes now accounting for 20.24% of the property landscape with the launch of an exclusive new gated development on 26 November adding 20 more units to the existing 1250 estate homes.
    • 24 Nov 2017
      There are some things that money can’t buy – spectacular views from Mouille Point to the V&A Waterfront and a trendy and lively neighbourhood that encapsulates the very best of the Cape Town lifestyle.
    • 24 Nov 2017
      Tshwane’s four-bedroom Mayoral mansion, nestled among ambassadorial residences in the upmarket suburb of Muckleneuk, fetched R5.1 million after spirited bidding at High Street Auctions’ final sale of the year.
    • 23 Nov 2017
      Reserve Bank Governor, Lesetja Kganyago, said that the Monetary Policy Committee had once again decided to let the interest rates remain unchanged with the repo rate at 6.75%, and the prime lending rate at 10.25%.
    • 23 Nov 2017
      As the holiday season approaches, most of us are counting the days until that year-end bonus hits our account. There’s nothing quite like a little bank balance booster to get us in the holiday spirit.
    • 23 Nov 2017
      The Adelphi Centre (now entitled “ARTEM") in Sea Point, Cape Town, is being extensively renovated, and once complete will offer an ultra-luxurious galleria style shopping centre unlike any other seen on the Atlantic Seaboard or in Cape Town.
    • 23 Nov 2017
      If you are looking to sell your home in today’s real estate market, there are certain things that you need to include both inside and outside your house. Today’s generation of home buyers is looking toward a more eco-friendly, energy and water conscious home, and if your house stands out then you are more likely to be able to sell it.
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK