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Special levies
29 October 2017  | Alan Els
 
Body Corporates (BC) established in terms of The Sectional Titles Act, 1986 (Act No 95 of 1986) were empowered to require owners of units within the scheme to contribute a monthly levy.  The levy raised had to be sufficient to cover the day to day repairs, upkeep, control and management of the common property.

The levy was calculated proportionate to the participation quota (PQ) of the respective units making up the complex.  If required, the BC could raise a special levy to cover extraordinary and unexpected expenses to maintain the common property.  Raising a special levy placed a financial burden on owners, none more so than on an owner in the process of selling his unit.

In the absence of anything contained in the deed of sale to the contrary, the full special levy would be due and payable by the registered owner on the date that the special levy was raised.  This was regardless if the special levy was due and payable on a date following registration of transfer to the buyer.

With the implementation of the Sectional Titles Schemes Management Act 8 of 2011 (STSMA), which came into effect on 7 October 2016, liability as to whom is responsible for payment of a special levy or special contribution changed.

Section 3 of STSMA now provides that with a change of ownership, that the purchaser will from date of registration of transfer be liable for payment of the pro-rata special contribution raised by the BC, provided that the BC has permitted the owners to pay the special contribution in instalments to a date following registration of transfer to the purchaser.

Buyers and estate agents should be cautioned to investigate if a special contribution has been raised, before concluding a sectional deed of sale.

Sellers must equally be careful.  Should a seller neglect to advise an estate agent or buyer that a special contribution has been raised by the BC, they may still be held liable for payment of the full special contribution, if it can be shown that they had knowledge of the special contribution and that they willfully misrepresented their knowledge thereof.

 

While the raising of a special contribution better represents the situation in that the purchaser will be contributing to the improvements they will ultimately benefit from, the parties should be cautioned to investigate this aspect before entering into a sectional deed of sale.

 
 
 
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