On looking at the lengthy process of collecting outstanding levies by breaking it down step by step, says Michael Bauer, general manager of the property management company IHFM, it is clear that this situation needs to be avoided if at all possible as the body corporate’s financial situation is adversely affected over a very long period of time.
On establishing that the levies in arrears (when it exceeds R3 000) are not going to be paid by the stipulated date, an attorney will be appointed. From there, within six to nine weeks, a summons will be served by the Sheriff of the Courts to the owner of the unit at his registered address or by default at the section, and then within seven to nine weeks of that summons being issued a judgement will be granted by court order.
Another four to six weeks later, a warrant of execution is served by the Sheriff to attach goods. The owner of the unit’s salary or rental income can be attached in a court order and later (another four to six weeks), his movable assets will be sold by the Sheriff.
“If there is a bond on the unit”, said Bauer, “if the amount owed to the bank is more than the likely sale in execution amount, the owner will be sequestrated and a trustee will be appointed by the courts. This will then be followed by the sale of the insolvent estate by the trustees. This process can take over a year to get to the point of a sale taking place and monies recouped”, he said.
If there is a small or no bond on the unit, the process is quicker: once the execution sale is granted by court order, the unit is attached by the Sheriff and then auctioned. This can take up to six months to get to the point of a sale taking place, said Bauer.
“Unfortunately, to then add to the body corporate’s woes of having to wait for the amounts outstanding,” said Bauer, “because of the complexities of the South African conveyancing process, it can then take up to six months for a unit sold on auction to transfer to the new owner and the levy arrears amount to be settled.”
“All of the above assumes that all goes smoothly and that the processes applied for are dealt with when they should but if there are other complications such as dealing with a deceased estate, a de-registered company or close corporation, then it can take years to wind up and recoup the owed amounts”, said Bauer.
Trustees can help smooth out the process by having up-to-date information to pass on to the Sheriff and the attorneys, so that the person or people involved can be tracked down with as little time wasted as possible.