Change in law eases ar­rears re­cov­ery

Weekend Argus (Saturday Edition) - - PROPERTY -

SEC­TIONAL ti­tle trustees and home­own­ers’ as­so­ci­a­tion direc­tors have wel­comed a change in leg­is­la­tion that will make it eas­ier for them to re­cover ar­rear levies from de­fault­ing own­ers.

This change, made in terms of the Rules Board for Courts of Law Act of 1985, pro­vides for a court to set a re­serve price when a prop­erty is to be sold in ex­e­cu­tion of a debt judg­ment, says An­drew Schaefer, man­ag­ing direc­tor Trafal­gar prop­erty man­age­ment com­pany.

This will pre­vent banks from be­ing able to uni­lat­er­ally veto such sales and leave body cor­po­rates, home­own­ers’ as­so­ci­a­tions and lo­cal au­thor­i­ties with no way of giv­ing ef­fect to judg­ments they ob­tained for out­stand­ing levies, rates and ser­vice charges, he says.

The pos­si­bil­ity of banks do­ing this, Schaefer says, was il­lus­trated in a case in the Gaut­eng High Court and the Supreme Court last year.

The body cor­po­rate

of Em­pire Gar­dens, hav­ing tried other ways to re­cover un­paid levies from an owner in the scheme, even­tu­ally sought judg­ment for the debt, the at­tach­ment of the prop­erty and a sale in ex­e­cu­tion.

How­ever, the sale was blocked by the bank hold­ing the mort­gage be­cause the owner was not in ar­rears with bond re­pay­ments and the price of­fered for the prop­erty at the sher­iff ’s auc­tion was much lower than the out­stand­ing home loan bal­ance.

When the body cor­po­rate tried to se­ques­trate the de­fault­ing owner, the bank also suc­cess­fully op­posed that, on the grounds the body cor­po­rate would be the only cred­i­tor to ben­e­fit from such a move.

“Even af­ter lengthy and costly court ac­tions, the body cor­po­rate still had no way to col­lect the ar­rear levies, and no way to stop the owner from run­ning up fur­ther ar­rears. This is not an un­com­mon oc­cur­rence ,” says Schaefer.

In many cases, this has been “se­verely detri­men­tal” to the in­ter­ests of other own­ers, who have ei­ther had to pay higher levies to make up the short­fall cre­ated by the de­fault­ing own­ers, or watch the value of their own in­vest­ments un­der­mined be­cause their body cor­po­rate or home­own­ers’ as­so­ci­a­tion had to cut back on main­te­nance and re­pairs to the com­plex.

“The new court rule pro­vides for a re­serve or min­i­mum price to be set by the court that grants any debt judg­ment that will re­sult in the sale in ex­e­cu­tion of a pri­mary res­i­dence, which means the bank hold­ing the bond on that prop­erty will have to ac­cept any sale con­cluded at that price or more.

“As is the usual prac­tice in such cases, the buyer will then set­tle the out­stand­ing levies, so own­er­ship of the prop­erty can be trans­ferred, and the body cor­po­rate or home­own­ers’ as­so­ci­a­tion will have re­cov­ered its debt.”

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.