“Owners of units in sectional title schemes might not see their levy account as a priority – but as this is actually the lifeblood of any body corporate, a person who withholds their levies for any reason is doing the body corporate harm”, says Willem le Roux, director of sectional title finance company Propell.
Where Propell have been called in to assist in levy collections, there are various reasons given for the non-payments. In most cases owners fail to speak to the trustees if they have problems with paying their accounts. Instead, they tend to just stop paying.
There are, however, ways of arranging payment plans with the body corporate, and it is preferable to arrange this before the amount outstanding becomes unmanageable.
“Withholding levies is sometimes also used as a leverage tool if the owner is unhappy with something within the scheme, but this is not a solution to any problem”, says le Roux.
A sectional title development that has levy collection problems will be unable to pay its creditors and keep the property maintenance up. This will eventually cause the property value to drop, and in turn, the owners’ investments will decrease in value.
Collection outstanding levies can take time, as the body corporate has to go through a legal process to claim amounts outstanding. On discovering that levies are in arrears, they will usually first send a reminder for non-payment of the levy account to the owner, but if he ignores this, a letter of demand will be sent. If this letter is ignored, the owner will be handed over to attorneys, risking high legal costs and being listed as a bad payer on ITC.
If the levy account is handed over, the Sheriff will serve a summons. Summons can be either personally served or pinned to the front door of the unit, as this would be the listed legal address of the owner of the account unless the body corporate has been notified in writing of a different address. The owner will have ten working days to respond to the summons. If he fails to respond, the Sheriff will attach and sell the owner’s moveable property. If the proceeds of this sale is insufficient to cover the levy debt, the body corporate may ask the sheriff to sell the owner’s unit.
“Owners who do not pay their levies should realize”, says le Roux, “that the trustees of the body corporate must use the full strength of the law to collect outstanding levies and they have a duty to the other owners to protect them and the value of their units”.