Levies in a sectional title scheme are payable in advance and a reader wants to know if the full outstanding levies in a particular financial year can be collected following the continued default of the owner concerned.
The Sectional Titles Scheme Management Act (STSMA) lays down that not only are trustees able to collect outstanding levies, they are obliged to do so.
Section 3(1) of the act states that one of the functions of the trustees is to raise the amounts determined by levying contributions on the owners in proportion to the quotas of their respective sections.
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Additionally, the act outlines that the functions and powers of the body corporate must be performed by the trustees in terms of the rules laid down.
These functions are subject to the provisions of this act and any rules imposed or direction given at a general meeting of the owners of sections.
In the matter of the Body Corporate of Fish Eagle v Group 12 Investments, the court considered a resolution of the body corporate that outstanding levies would be dealt with by a meeting-based discussion instead of continuing litigation against defaulting members.
The court ruled that such a resolution was outside the scope of the body corporate’s authority as, under the legislation, it was not entitled to pass a resolution overruling its obligations.
Under the management rules the trustees should, upon the default of a member, provide notice of such default.
They should also confirm that the overdue amount plus interest is due immediately and that the body corporate intends to take steps for recovery should it not be paid within 14 days of the notice.
However, it is important to note that in accordance with the act the liability for contributions levied under any provision of subsection 3(1) accrues from the passing of a resolution to that effect by the body corporate.
Similar provisions were previously contained in section 37(2) of the Sectional Titles Act.
Therefore, in the matter between the Body Corporate of The Peaks and Prinsloo N.O., the court considered the validity of a claim for outstanding levies where the body corporate had failed to comply with the provisions of section 37(2).
In its judgment, the court stated that the statutory provision is designed to ensure that any action for the claiming of levies by the body corporate is sanctioned by the trustees.
This section clearly states that liability for such levies accrues from the passing of such a resolution and thereby protects sectional title holders from claims for levies which have not been approved by the trustees.
Accordingly, in this instance, the court dismissed the matter and the body corporate was unsuccessful.
For the trustees to ensure the claims for levies do not lapse under the provisions of the Prescription Act, it is important that they act timeously in recovering levies due to the body corporate.
Claims for levies will typically prescribe on the same basis as with the majority of other claims – after a period of three years.
To interrupt the prescription period, the trustees should ensure that summons is issued within the period to guarantee the claim remains viable.
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