Advice and Opinion

Special levy collections can be tricky

Building maintenance backlogs can create situations where the trustees have high pressure to decide what has to be done. They therefore have to make the hard decision of raising large sums of money from the owners in the scheme in a short space of time, says Michael Bauer, general manager of the property management company IHFM.

It might be that a few years have gone by with no or not enough maintenance having been done and the various jobs could add to millions of Rands, he said.

In one particular case Bauer has come across recently, the amount that had to be raised was R3 million in a sectional title scheme with only 34 units – the special levies varied from ±R227 000 for the largest units and around R64 000 for the smaller units. These are large sums of money for the average household, said Bauer.

The problem in many cases is that the quotes received from the various contractors tendering for the contract are only valid for 60 days, and raising the special levies can often take longer than this amount of time, he said. The trustees have a limited time frame, therefore, to devise a plan to get the necessary money in and collect it all.

Some owners will have the ability to pay the full amount upfront and others will make arrangements to pay in three, six or twelve instalments, depending on their particular financial situation but many who pay upfront ask for a discount.

Discounting the special levy is not possible, because what the body corporate needs to raise is what it must get in. What those who pay upfront must remember is that those who arrange to pay in instalments are charged interest on the amount they owe, so in effect not having to pay interest is a discount, said Bauer.

One can understand that owners who do have the cash to pay over are reluctant because they are losing out on their investment and interest on their money, but the reality is that if a special levy is due, the owners must pay it as quickly as possible, he said.

Special levies are always calculated according to the participation quota and if the trustees do all that they need to do in terms of the Sectional Titles Act, the owners must be reasonable and assist the trustees in doing their jobs, but paying over the moneys due when it is called for, said Bauer.


This information is published for general information purposes and is not intended to constitute legal advice. Specialist legal advice should always be sought in relation to any particular situation. Property Wheel will accept no responsibility for any actions taken or not taken on the basis of this publication.

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