Sectional Titles

Section 37(2)

As reported in May in Sectional Title confusion, problems have arisen with the application of this section since it does not empower the body corporate to collect levies for the remaining part of the budget year from the new owner. To avoid problems, Chas Everrit has drafted a clause to be inserted into the offer to purchase.

It reads as follows:
"It is agreed between the parties that the seller shall not be liable for the levies and other costs due and payable to the Body Corporate as from the date of registration of the transfer into the purchaser's name. Accordingly, the purchaser shall be liable and shall pay all levies and other costs due to the Body Corporate from such date. The purchaser hereby indemnifies the seller against any claims in terms of Section 37 of the Sectional Titles Act."

It might be argued however, that this clause still fails to protect the body corporate, since it is not a tripartite agreement. Although the purchaser agrees to indemnify the seller, the body corporate has not been given contractual rights against the buyer as a replacement for its section 37(2) rights against the seller. It is still essentially an agreement between the buyer and the seller.

Nor might this not be remedied by the insertion of the following clause into the clearance certificate as advised:
"The Body Corporate has satisfied itself that provision has been made for the payment of all levies, and waives its right in terms of Section 37 to claim against the seller for levies."

What is meant by the satisfaction? Satisfaction does not necessarily amount to the right to enforce payment of the various levies against the buyer for the remainder of the year, unless the outstanding balance has been paid in full and apportioned.

Full MoneyWeb article

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