The process of raising general levies in sectional title schemes

1) Before every annual general meeting (AGM) the trustees are obliged to prepare an itemised estimate of anticipated income and expenses (a budget) of the body corporate for the following financial year.

2) Copies of this budget must be sent out to all persons entitled to attend the AGM with the notice calling the AGM. Notice of the AGM must be given at least 14 days before the date of the AGM if no special or unanimous resolutions are to be considered, or at least 30 days before the date of the AGM if a special or unanimous resolution is to be considered. This gives all those entitled to attend an opportunity to peruse the budget, as well as the other documentation sent with the notice, before the AGM.

3) At the AGM a quorum of owners must be present or represented. The minimum quorum requirements will differ depending in the number of units in each scheme. In schemes with 10 units or less, owners holding at least 50 per cent of the value of the votes must be present or represented. In schemes with 11 – 49 units, owners holding at least 35 per cent of the voting values must be represent or represented. In schemes with 50 or more units, owners holding at least 20 per cent of the value of the votes must be present or represented.

4) During the AGM the budget, as proposed or amended, must be approved by an ordinary resolution of owners ie. an ordinary majority of 51 per cent or more. This vote will be taken on a show of hands in which each owner has a vote for each section owned unless a poll is demanded by any person entitled to vote at the meeting, in which case the votes will be counted in accordance with the value of the votes (determined by the participation quotas allocated to each section or any special rule that varies these values).

5) The trustees must then meet within 14 days after the AGM to resolve to raise general levies due by owners in accordance with the approved budget. They must determine the amounts payable by each owner and the installments in which these amounts will be paid. This trustee resolution is the legal act that creates each owner's liability in respect of payment of levy contributions to the body corporate.

6) At this stage the trustees should resolve to charge an agreed rate of interest on levy arrears.

7) Once the levies are raised, the trustees must advise each owner in writing of the amount payable.

If you would like to learn more about sectional title scheme finance and bookkeeping, Paddocks sectional title training firm will present a 4- week part-time Sectional Title Bookkeeping Course. Please contact Kate on 021 674 7818. Alternatively, see www.paddocks.co.za.

Article by: Jennifer Paddock - www.paddocks.co.za