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Problems for a sectional title owner who has arrear levies

Feathers are set to fly in sectional title complexes following amendments to sectional title regulations, warns specialist sectional title attorney Marina Costas.

She explains that one of the new sectional title regulations specifies that a sectional title owner who has arrears levies may not serve as a trustee.

"This is an issue we have been lobbying for, and it is hearening to see it has finally been addressed", Costas says. "It will ensure that trustees can now be relied on to hand over the debtors of the complex for legal action.

"In the past, trustees who were in arrears would be loath to initiate legal action, as they would be implicated."

The amendment, to Annexure 8, Rule 7, states the nomination or appointment of a trustee cannot be made if that trustee is in arrears with any contributions payable by him in respect of his section and his undivided share in common property.

In addition, there can be no nomination or appointment if the individual has persisted in breaching conduct rules, despite written warnings by the trustees or managing agents.

"This will get especially interesting when an individual who has been nominated disputes that he is in arrears, or that he is in breach of conduct rules. We suspect that many lively annual general meetings lie ahead," she says.

Also a potential problem situation is where a trustee is already in his position, and falls in arrears.

"The latest amendment now says that if he is in arrears for more than 60 days with any levies or contributions payable, and he fails to bring such arrears up to date within seven days of being notified to do so, then he ceases to hold office," Constas says, adding that she believes this amendment is way overdue.

Another new amendment relates to a rule that has been deleted, Rule 31( 4A), which catered for the temporary increase in the levy between the financial year end of the scheme and the annual general meeting, by allowing an escalation of 10 percent.

Constas elaborates: "Since this rule was deleted, there was a question mark hanging over what would replace it. The answer may lie in the insertion of Rule 31(4B) - which says that 'the trustees may, from time to time, when necessary, make special levies upon the owners or call upon them to make special contributions in respect of all such expenses as are not included in the budget'.

"In other words, you could use this new regulation to raise the levy during the interim period between the financial year end and the annual general meeting."

An amendment has also been made to the regulation of the Deeds Registries Act, which is relevant to sectional title. Effective from May 2, this amendment stipulates that a R500 fee will apply when any person seeks to resolve a dispute by applying to the chief registrar for an arbitrator.

The next development in the pipeline will be the passing of the Sectional Title Schemes Management Act and Ombudsman Act, which should become effective this year.


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