What is a levy?

If you are buying a sectional title property such as a property in a complex or a flat, you will be charged levies.

These are the costs involved in running the complex, and include municipal rates and taxes, limited building insurance coverage, as well as repairs and maintenance.

Levies should be placed into two separate funds, namely an administrative fund and a reserve fund (every Scheme should have both of these funds in place). The funds, collected through levies that are placed in the administrative fund, are intended for the day-to-day administration of the Scheme. The funds, collected through levies and which are placed in the reserve fund, are intended to be used for future maintenance requirements of the Scheme.

In addition, it must be noted that Schemes may raise special levies in order to cover unforeseen, but necessary, costs that cannot be delayed.

Find out what the difference is between rates & taxes and levies

Defaulting on levy payments

Levies are dealt with in terms of the Sectional Titles Scheme Management Act (“STSMA”). Section 3(1)(c) of the STSMA, provides:

“A body corporate must perform the functions entrusted to it by or under this Act or the rules, and such functions include requiring the owners, whenever necessary, to make contributions to such funds.”

When a member fails, refuses or neglects to pay levies to the Body Corporate, a Body Corporate may invoke means to collect the levies owed to it.

In addition to the STSMA, the Prescribed Management Rules (“PMR”) make mention of payment of levies/contributions by members. According to PMR 20, one of the sanctions a member can face for their inability to pay levies is that such member will be precluded from voting on ordinary resolutions.

There are two main methods of collecting arrear levies from non-paying members, namely: –

• Community Scheme Ombud Services (CSOS) process; and
• Ordinary Courts process