ST Owners who do not pay levies responsible for legal costs and interest
Although it is sometimes alleged that the trustees of sectional title schemes lack the power to enforce the Sectional Title Act, this is far from being the case, says Michael Bauer, General Manager of IHFM, writing in his latest weekly sectional title newsletter on www.ihfm.co.za.

This, says Bauer, is particularly true when it comes to the collection of levies and contributions from owners in accordance with the provisions of Rule 31.

“It should be noted by sectional title owners who are slow in meeting their payment obligations that sub-rules (5) and (6) of Rule 31 make them liable for all legal costs involved in the collection of unpaid levies or other sums in arrears as well as any legal costs incurred in getting an owner or his tenants to abide by the body corporate’s rules.

Furthermore, the sub-rules specifically allow the trustees to charge interest on arrear amounts at a rate which it is in their power to determine.

Rule 31 (6), says Bauer, permits the trustees to charge interest not only on the unpaid levies but also on the unpaid interest, i.e. it condones charging compound interest on arrears levies.

Bauer has on several previous occasions warned trustees that if a body corporate gets itself into a position where a significant proportion of its owners are behind in their levy and other payments, there is a danger that the entire project will lose value.

“Well managed sectional title complexes,” he has said, “not only collect their levies on time but build up reserve funds which enable them to handle large (and sometimes unforeseen) repair and maintenance outlays without calling for a special levy and/or having to raise a loan.”

Article by: www.ihfm.co.za