Your guide to sectional title levies

6 things you need to know about monthly levies

Owners of sectional title units often get hot under the collar when they’re hit with extra charges by the body corporate over and above their regular monthly levies. But levies are strictly laid down by law, and trustees of a sectional title scheme can’t just ask for money out of the blue. Every cent spent must be accounted for and members are entitled to see the books. Here, in a nutshell, are the common levies that can be charged.

1 NORMAL LEVIES FOR AN ADMINISTRATIVE FUND

The administrative levy is the most common and is used to finance the normal maintenance costs of a sectional title complex. If you buy in a sectional title scheme, you don’t only buy your unit but also a part of the common property, such as the garden, clubhouse or swimming pool. It means all the unit owners own the common property. Which is why everyone must contribute towards the maintenance and management of the complex.

The levies of all the sectional title scheme’s members are placed in a fund, called an administrative fund. The body corporate must be transparent about what the money is used for and can’t just withdraw money for any reason. If the levies are changed, it must be approved at the members’ annual general meeting (AGM).

The administrative fund levies generally cover expenditure on:

● Repairs, maintenance and management of the common property such as paying for garden services;

● Municipal charges, such as electricity, water and sanitation services and refuse removal;

● Insurance premiums that provide cover for the grounds or buildings.

2 LEVIES FOR A RESERVE FUND

The law prescribes that a separate fund be established for potential future repairs and maintenance on the common property.

This fund is called a reserve fund. It’s like a nest egg to ensure there’s enough money should an essential repair be required or for major projects planned after a certain time, such as repainting the common property every 10 years, explains Kayley Leverton of legal firm Gillian & Veldhuizen Inc. Any levies raised for the reserve fund must be approved by members at the AGM.

3 SPECIAL LEVIES REQUESTED BY THE TRUSTEES

These special contributions may be charged only to cover urgent and essential expenditure. Special levies may not be levied for any expenses already covered in the budget approved at the previous AGM. This means a special levy can’t be raised to cover maintenance.

It should be an unforeseen incident such as unexpected and major storm damage which can cause the complex further impairment if not repaired.

A reserve fund is intended to prevent special levies. So if the reserve is well managed a special levy is seldom necessary.

4 EXCLUSIVE-USE CONTRIBUTIONS

A levy is applicable in certain parts of the common property if you have exclusive use of it, explains lawyer Kayley Leverton. This means the area is strictly for your use and other sectional title members may not use it. Examples are garages, parking bays and store rooms. They’re usually indicated on the sectional title scheme plan or in the rules of the sectional title scheme.

5 THE LEVY TO THE OMBUDSMAN OF SECTIONAL TITLE SCHEMES

This levy must be paid by law. It’s charged according to a sliding scale, meaning the higher a member’s monthly levy, the higher their contribution towards the ombudsman or, as it’s known, the Community Schemes Ombud Services.

If your monthly levy is R600, your contribution will be R2 a month; if your levy is R700 a month, your contribution will be R4 a month, and so the amount increases to a maximum of R40 a month for members whose levies are above R2 500 a month.

There are exemptions, such as when a unit’s monthly levy is below R500 and for members’ whose monthly household income after tax is below R5 500, says lawyer Kayley Leverton.

6 PENALTIES

Penalties occur when, for example, someone fails to pay their monthly levy. The management committee of the sectional title scheme may then charge interest on the arrears.

If they have to take legal steps to get the money, the legal fees may also be claimed from the nonpayer.