Special levy provision under the new sectional title schemes management act

While provisions have been set in the Sectional Title Schemes Management Act (STSMA) (which became effective on the 7th October 2016) for a reserve fund to be established for future maintenance and repair work to common property in sectional title schemes, there might still be the need for special levies to be raised in certain circumstances.
The new Act caters for special levies in Section 3 (3) and provides that “Any special contribution becomes due on the passing of a resolution in this regard by the trustees of the body corporate levying such contribution and may be recovered by the body corporate by an application to an ombud from the persons who were owners of units at the time when such resolution was passed” – which does not indicate any remarkable change except that the ombud can now be approached to help collect special levies, says Michael Bauer, general manager of property management company IHFM.
A notable addition, however, is that the STSMA goes on to stipulate that: “Provided that upon the change of ownership of a unit the successor in title becomes liable for the pro-rata payment of such contributions from the date of change of such ownership.”
In many cases where special levies are being raised, the owners cannot afford to pay a lump sum up front and an instalment plan can be offered to them by the body corporate.
Where an instalment plan is in place, the estate agent and the potential buyer must be made aware that the new owner will become responsible for the pro rata special levy instalments – from the date that the buyer takes transfer. Provision should be made in the sale agreement to formalise the acceptance of the responsibility of the special levy instalments from the date that the new owner takes occupation, said Bauer.
An easy example of how a special levy would be pro-rated, is if a unit is sold on the 1st October, with a special levy resolution passed on the 2nd of October, payable in 12 equal monthly instalments starting on the 1st November. If the transfer of the unit is to take place on the 1st January, then the new owner will take over payments of the special levy on that date – which means he pays 10 of the 12 instalments as the original owner would have paid two of the instalments by that stage, said Bauer.
It’s a fair and simple system, one that is not overly complicated, but buyers do need to check if there is a chance of a special levy being raised in the near future or while the sale process is taking place, and agents need to notify their buyers of such a condition – as they should have to show the financial statements to the potential buyers anyway, he said.
Sale agreements of sectional title properties tend to stipulate that the purchaser becomes liable for special levies once transfer takes place and it is only by mutual agreement between the buyer and seller that this condition can change. It is simpler to stick to the standard modus operandi, and not deviate with complicated alterations to payment plans, advised Bauer.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 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.
    • 22 Nov 2017
      While sales have noticeably slowed in most sectors in most Cape town suburbs, the security estate sector in Constantiaberg has bucked the trend by remaining buoyant, with sales by August this year already surpassing total sales in 2016.
    • 22 Nov 2017
      The end of the year is fast approaching, and so are all the travellers, tourists and holidaymakers. For those who live near or own a property in a holiday-hotspot, the festive season also brings with it an abundance of short-term rental opportunities. Its a great way for property owners to make a few extra rand for their own holidays or to put towards their savings.
    • 21 Nov 2017
      The buying process is over, and the moving truck has delivered your household goods to your new property. Now it’s time to unpack and turn your new house into a home.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us