How to Avoid Special Levy Shock

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Sectional Title Governance

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.

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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.

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