Understanding Sectional Title Levy Disputes in South Africa

As a property owner in a sectional title scheme in South Africa, you are likely to encounter levy disputes at some point. These disputes can arise for various reasons and if left unresolved, can cause significant financial and legal problems for all parties involved. In this article, we will explore the common causes of sectional title levy disputes in South Africa and offer guidance on how to handle them effectively.

What is a Sectional Title?

A sectional title scheme comprises of three elements namely: (1) owners’ sections, (2) exclusive use areas; and (3) common property.

A Sectional Title Scheme provides for the division of buildings into sections and common property and for the acquisition of separate ownership in sections coupled with joint ownership in common property. These schemes fall under the control of the Sectional Titles Act.

Understanding Sectional Title Levies

Before delving into the causes of disputes, it is essential to understand what sectional title levies are.

Sectional title levies are the monthly contributions paid by each owner in a sectional title scheme to cover the costs of running and maintaining the common property. These costs can include expenses such as security, maintenance and insurance.

Sectional title levies are determined by the body corporate, which is responsible for managing the scheme. The body corporate comprises all the owners in the scheme and is responsible for enforcing the rules and regulations governing the scheme.

What Expenses does a Body Corporate have?

A Sectional Title Scheme and/or body corporate’s expenses include, inter alia, the administration, control, management, upkeep and repair of the common property, payment of taxes and other local authority charges for electricity, gas, water, fuel, sanitary and other services to the building/s and land, any premiums of insurance, and sufficient for the discharge of any duty or fulfillment of any other obligation of the body corporate.

What are Special Levies?

A special levy is an additional financial contribution that may be raised from property owners to pay for a project, upgrade or extensive repairs that are outside of the normal monthly repair and maintenance plans and requirements.

How and When are Levies Determined?

Levies are determined and agreed upon at a Sectional Titles annual general meeting (“AGM”) and are based on the expected expenditure for the administrative and the reserve funds in the next financial year.

Once approved by owners, the estimated expenditure is typically divided between the owners.

Administrative Funds & Reserve Funds?

Each Sectional Title body corporate is required in terms of the Sectional Titles Schemes Management Act to establish an administrative fund and a reserve fund reasonably sufficient to cover its expenses.

What is a MR & R Plan?

Each Sectional Title body corporate is required to prepare a 10 year maintenance, repair and replacement plan (a.k.a MR&R plan) and pay for its implementation from the reserve fund.

Can I Withhold my Levies?

Members are obliged to make payment of levies in full at all times, even when there is a dispute. As a result, you must first pay the disputed amount and then only, can you may declare a levy dispute.

I have a Levy Dispute - What must I do?

If you have an issue with the levies you are paying or your levy statement, your first port of call will be trying to settle the matter with your body corporate. If that fails then it is advisable to consult with a property attorney.

Common Causes of Sectional Title Levy Disputes

Non-payment of Levies

One of the most common causes of sectional title levy disputes is non-payment of levies. Non-payment can occur for various reasons, including financial difficulties, disputes with the body corporate, or disagreements about the amount of levies due.

Non-payment of levies can have severe consequences for both the owner and the body corporate. For the owner, it can result in legal action, including the possibility of having their unit sold to recover the outstanding amount. For the body corporate, non-payment can lead to cash flow problems, making it difficult to maintain and manage the common property effectively.

Disagreements over Levy Amounts

Another common cause of disputes is disagreements over the amount of levies due. This can occur if an owner believes that their levy contribution is too high or if there is a dispute over what expenses should be included in the levy.

In such cases, it is essential to refer to the scheme's governing documents, which should outline how levies are calculated and what expenses they cover. If there is still a disagreement, it may be necessary to seek legal advice or mediation.

Disputes over Maintenance and Repairs

Disputes can also arise over maintenance and repairs of the common property. This can occur if an owner believes that the body corporate is not maintaining the common property adequately or if there is a dispute over who should be responsible for certain repairs.

In such cases, it is essential to refer to the scheme's governing documents, which should outline the body corporate's responsibilities for maintaining the common property. If there is still a disagreement, it may be necessary to seek legal advice or mediation.

Handling Sectional Title Levy Disputes

To handle sectional title levy disputes effectively, it is essential to follow the correct procedures outlined in the scheme's governing documents. This may include steps such as:

1. Informal Dispute Resolution: In the first instance, it may be possible to resolve the dispute through informal negotiations with the other party or parties involved.

2. Formal Dispute Resolution: If informal negotiations are unsuccessful, it may be necessary to escalate the dispute to a formal level, such as mediation or arbitration.

3. Legal Action: If all other avenues have been exhausted, it may be necessary to take legal action to resolve the dispute.

Barter McKellar has extensive experience with assisting all role players in levy disputes. If you need assistance with a property dispute matter, contact our offices today to schedule a consultation with one of our specialist property law attorneys. Alternatively, you can schedule a consultation online by using the following link Book An Online Consultation.