A query

The query reads as follows:
"I trust that you have run something on the current situation where managing agents are interpreting the recent amendment to the act to imply that they should collect levies for the remainder of the financial year for the issue of levy clearance certificates.

There seems not to be agreement that this is the implication of the amendment. And the question arises as to who pockets the interest on levies so collected in advance. It should be credited to the specific owner, or at least to the body corporate, but is this happening?"

Any answers?

Reader Comments:

Lynette Lauderdale - Ewing adams 16/09/2004:

If the Purchaser has had to pay upfront, then the upfront levies should be placed in an interest bearing account for the Purchaser's account

Marcia du Pont 17/09/2004:

I am also very interested in any answer as I am a owner of a few sectional titles paying levies far in advance but never receive any INTEREST whatsoever. Now especially that levies MUST be paid in advance when purchasing a sectional title property, the question again arises WHO CAN CLAIM THE INTEREST ON SUCH AMOUNTS. Definitely the new law wasn't implemented so that a Body Corporate can claim any interest. Legally it is the owner's money and the OWNER is entitled to interest. Marcia du Pont (Tel 082 421 8052) e-mail :

Stian Dreyer 17/09/2004:

I have difficulty with the interpretation. Though levies are being determined annually based on the figures of an annual budget they are still being collected on a monthly basis, hence the liability only accrues monthly. The interpretation advanced has the effect that a person is held liable for a debt which has not become due, following him ceasing to be a member of the Body Corporate, following registration. It is interesting to note that unlike municipal debts in relation to rates for instance, the "annual" levy does not become fully due and payable on default in respect of a member.

If an existing member defaults he is not held accountable for the balance of the levies, yet a member leaving the community is expected to accept liability for this debt, despite the fact that he is not in default of that same. This clearly contradicts a member's right to equal treatment.

Another point of concern is that according to the interpretation it is possible to hold 2 individuals (the new and the old one) responsible for the same debt. The tripartite agreements that are currently being implemented result in a seller having to stand surety for the purchaser's ability to pay his levies. This clearly amounts to potential prejudice. Finally, to expect a new member to prepay his levies amounts to unequal treatment of the new member. This is also true when he has to lay out expenses which have not yet been incurred, for example, water, rates and insurance.

The query being raised illustrates the problems with the interpretation in terms of which the full amount must now be paid and accordingly it is suggested that the interpretation be carefully reconsidered since as illustrated above the problems do not stop with the issue of interest. It has been suggested by some that the amendment related to special levies only.

Menno Van Mechelen 25/09/2004:

Myself and partner Janneke have been specialising in sectional title flat sales is the Bellville area for the last 14 years, so we know most of the details regarding the body corporates and their administrators. To my knowledge, there is only one sectional title administrator with complexes in this area, who collects the levies "up front" for the remainder of the financial year. The rest seem to be continuing as always or drawing up the relevant addendum for the parties to sign at the conveyancer. It is therefore vital for estate agents to know which administrators insists on the "pre payment" method so that this rather large cost can be taken into account when calculating the buyer's upfront costs. A really confusing situation I think!!

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