Hiked & Backdated Levies - My Rights?

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01 Nov 2012

A Property24 reader asks:

A reader who bought an apartment in a new development questions the levy being raised upon moving in as well as the demand for an additional special levy.

I just moved into an apartment I bought in a block of flats. I am the first owner of this apartment as it is a new development. At first our monthly levy was estimated at R700, however, when we moved in and after our first meeting, it went up to R932. 

Then they added an additional R1 800 which must be paid over 3 months. This is a backdated levy that accumulated since the building was already using resources before we started occupying it. Now we are required to recover the cost even if the apartments have not been registered on our names yet. 

Can we be held liable for the expenses of the building prior to the handover? 

Phil Calothi, owner and Managing Director of a leading Cape Town based managing agent company, Land and Sea Development Services (Pty) Ltd, advises:

The owners of units in sectional title schemes are liable to make contributions towards the estimated expenditure of the body corporate on the basis determined in the Sectional Titles Act from the date upon which the body corporate comes into being.

A body corporate comes into being on the date that the first transfer of a unit from the developer to a third party is registered. 

From that date onwards, all the registered owners are obliged to pay the levies determined by the trustees elected at the first general meeting. The developer remains the registered owner of all     un-transferred units subsequent to the incorporation of the body corporate and, as such, will be liable for the levies attributable to those units until such time as they have been transferred to other purchasers. 

In your case, it appears as if the developer (as is often the case) underestimated the levies and the trustees’ estimate of expenditure of the body corporate for the rest of the year resulted in a higher levy, which you are liable for. 

I find it very odd that the trustees also resolved to raise a special levy in the first year of existence of the body corporate and I strongly suspect that the levy was raised for expenditure for which you are not liable. I would therefore recommend that you refuse to pay the special levy until the trustees have convinced you that: 

  1. It was raised to recover expenditure that was incurred after the first transfer had occurred
  2. The expenditure was to the benefit of the body corporate
  3. That the developer will benefit in no way from the special levy (i.e. it is not being used as a means to pay some of his development costs e.g. rates and taxes/electricity consumption etc.) 

I hope that the above advice will be helpful to you. 

Readers may submit questions to Property24’s Guest Expert panel and/or comment below. We may not be able to answer all questions received, but all will be considered. 

About the Author
Phil Calothi

Phil Calothi

Phil Calothi is the owner and Managing Director of a leading Cape Town property management company, Land and Sea Development Services (www.lsds.co.za).

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