Special Levies in a Sectional Scheme: Who can raise them and who is liable to pay them?

Whilst the new Sectional Title Schemes Management Act 8 of 2011 (STSMA) makes provision for a reserve fund to be established by the body corporate of a sectional scheme, the need may still arise for a special contribution to be levied.

In terms of Section 21 of the Management Rules of the STSMA, a special levy may be raised on the authority of a written trustees’ resolution, to meet a necessary and unforeseen expense for which there is no provision in the annual budget of the body corporate.

A special levy only requires the approval of the trustees of the body corporate at a normal trustees’ meeting, and not all the owners in the scheme. The trustees must notify the owners of the decision to raise a special levy, advise them of the amount to be paid, as well as for what the special levy will be used.

Similar to the provisions of the old Act, Section 3(3) of the STSMA provides for the levying of a special contribution on the passing of a resolution by the trustees, which may be recovered from the owners of a unit at the time the resolution was passed.  The new Act however goes one step further and stipulates that on the change of ownership of a unit, and where there is an instalment payment plan in place, the new owner becomes liable for a prorata share of the levy contributions.

It is therefore important for a prospective purchaser in a sectional scheme to fully familiarize themselves with the financial position of the scheme before entering into such an investment.

Article written by
Lauren Maltby
Director
Property Division

Tel: (033)3553150
Emal: lauren@venns.co.za