How to avoid special levy shock

A special levy can come as a rather unpleasant shock to sectional title unit owners when the added expense was not expected. As such, property owners should make themselves aware of what to expect when such costs are incurred.

Verbal vs. written contracts for conveyancing

Implementing a special levy

Although the monthly levies paid by each owner in a sectional title scheme are intended to cover the maintenance and running costs of the scheme, on occasion there may be unforeseen expenses that arise that cannot be covered by the available reserve funds of the body corporate.

Typically, this situation arises when large-scale maintenance is required (e.g. replacing a roof) or major renovations are undertaken to the common property (e.g. creating a covered parking area). In such cases, the body corporate may impose a special levy in order to gather the funds needed to complete the required work. To do so, a meeting must be held and the implementation of the special levy needs to be sanctioned in terms of the body corporate rules. As such, there needs to be a quorum for the decisions taken in the meeting to be valid, and more than 75% of owners must vote in favour of a motion for it to be passed.

The cost implications

To determine the value of the special levy, the total maintenance or renovation cost will be calculated, and the total will then be divided between the sectional title units in the scheme.

However, the exact value for each owner may vary as this will be based on the participation quota for each sectional title unit, meaning that those with larger units within the scheme will pay proportionally higher special levies.

Should an owner feel that the special levy is being imposed without legitimate cause, this should be raised with the body corporate trustees. The ideal forum for this would be the body corporate meeting as this is where all owners have the opportunity to voice their opinion and vote on the matter.

Once the motion has been passed, however, each owner within the scheme – regardless of how he or she voted – will be liable for the special levy costs as agreed at the meeting.

Should there be any reason an owner is unable to meet this obligation by the required deadline, this should be discussed with the trustees so an arrangement may be reached as non-payment will result in legal action being taken to recover fees owed to the sectional title scheme.

While there are times when a special levy is unavoidable, it is always important for sectional title unit owners to attend the body corporate AGM and stay up to date on the financials so that any concerns can be raised early to prevent mismanagement of funds.

Follow Snymans on Facebook for more legal information, tips and news about property.

Recommended for you

Your Trusted Partner in Residential and Commercial Property Transfers
Sectional Title Governance

The Family Home – A customary law concept gets acknowledgement from the CC[post_view before=""]

This is an application that ended up in the Constitutional Court, by a partner (applicant) who lived with her late partner in, what was to them, their family home. Upon the death of her late partner, she (the applicant) was appointed the executrix of her deceased partner’s estate who died intestate. The applicant and deceased were not married but had lived together for years in the family home the applicant had inherited from her late grandfather as a “family home” intended to be for the benefit of the family.

Read More
Minors and immovable property
Sectional Title Governance

The Body Corporate and the Community Scheme Ombud Service[post_view before=""]

It is commonly accepted that the trustees appointed in a sectional title scheme have a fiduciary duty to manage the scheme in good faith and with its best interest in mind.  This is supported by the fact that all owners in a sectional title scheme have similar obligations toward other residents in the scheme and the common property. This is also underpinned by the Sectional Titles Schemes Management Act 8 of 2011.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Sectional Title Governance

ULTRA – The CC once again confirms the importance of women’s rights in Rahube v Rahube and Others [2018] ZACC 42[post_view before=""]

This case involves the apartheid era, where not only rights of black people were oppressed but also rights of women. In this case, an entire family lived together in a property – that is, the applicant, her grandmother, uncle, three brothers (including the first respondent) and two children.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Sectional Title Governance

SPLUMA in Mpumalanga: the saga continues[post_view before=""]

In this article, we take a closer look at an ongoing matter relating to SPLUMA in Mpumalanga. SPLUMA stands for the Spatial Planning and Land Use Management Act, and all municipalities in the province have issued by-laws relating to SPLUMA certificates and the transfer of property.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Sectional Title Governance

A closer look at two cases where HOA restrictions were dealt with[post_view before=""]

In 2014, a developer in Midstream estate in Midrand instituted legal action against two sets of owners/respondents in almost identical cases. Both cases dealt with clauses that imposed an obligation to build a dwelling within a prescribed time frame.  Here’s…

Read More

Need more Snymans content?

Sign up for our monthly newsletter.

How to avoid special levy shock

A special levy can come as a rather unpleasant shock to sectional title unit owners when the added expense was not expected. As such, property owners should make themselves aware of what to expect when such costs are incurred.

Verbal vs. written contracts for conveyancing

Implementing a special levy

Although the monthly levies paid by each owner in a sectional title scheme are intended to cover the maintenance and running costs of the scheme, on occasion there may be unforeseen expenses that arise that cannot be covered by the available reserve funds of the body corporate.

Typically, this situation arises when large-scale maintenance is required (e.g. replacing a roof) or major renovations are undertaken to the common property (e.g. creating a covered parking area). In such cases, the body corporate may impose a special levy in order to gather the funds needed to complete the required work. To do so, a meeting must be held and the implementation of the special levy needs to be sanctioned in terms of the body corporate rules. As such, there needs to be a quorum for the decisions taken in the meeting to be valid, and more than 75% of owners must vote in favour of a motion for it to be passed.

The cost implications

To determine the value of the special levy, the total maintenance or renovation cost will be calculated, and the total will then be divided between the sectional title units in the scheme.

However, the exact value for each owner may vary as this will be based on the participation quota for each sectional title unit, meaning that those with larger units within the scheme will pay proportionally higher special levies.

Should an owner feel that the special levy is being imposed without legitimate cause, this should be raised with the body corporate trustees. The ideal forum for this would be the body corporate meeting as this is where all owners have the opportunity to voice their opinion and vote on the matter.

Once the motion has been passed, however, each owner within the scheme – regardless of how he or she voted – will be liable for the special levy costs as agreed at the meeting.

Should there be any reason an owner is unable to meet this obligation by the required deadline, this should be discussed with the trustees so an arrangement may be reached as non-payment will result in legal action being taken to recover fees owed to the sectional title scheme.

While there are times when a special levy is unavoidable, it is always important for sectional title unit owners to attend the body corporate AGM and stay up to date on the financials so that any concerns can be raised early to prevent mismanagement of funds.

Follow Snymans on Facebook for more legal information, tips and news about property.