Refusing to Pay Levies - What to Do?

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25 Feb 2013

A Property24 reader asks:

A Property24 reader says they have an owner in their complex who refuses to pay levies and owes over R73k, which is impacting on their homeowners' association finances.

I live in a complex with 51 freestanding units that has been running for the past 16 years and I am on the board of directors. We have a case where the owner of a unit refuses to pay levies saying that on his title deed it was not registered as belonging to a homeowners' association. 

He owes just over R73 000. This is impacting on our finances as he benefits from the 24-hour security etc. that is provided. All the other units pay levies although not always on time. 

What can we do in this situation? 

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

Owners of freestanding units in a complex can only be forced to pay levies if it can be legally proven that they must do so. 

Under normal circumstances, a homeowners' association is incorporated in terms of the land use planning ordinance in terms of the rezoning approval of the development concerned. In this instance, the constitution of the association has to be approved by the local authority and the owners of the properties comprising the association have to comply with its constitution upon transfer of the properties into their names. If there is a clause in the constitution saying that a member must pay levies, he is then legally bound to do so. If there is no mention of the association on his title deed but the association was legally incorporated, he is still legally bound to comply with the provisions of its constitution. 

There are other legal vehicles through which homeowners' associations can be legally formed, for instance, by way of registering a private company the members of which are bound by the articles of association which may require that they have to pay levies. Again, if the entity has been legally incorporated, all members must comply with the articles whether their title deed says so or not. 

I have no idea of how your homeowners' association was incorporated so I do not know how legal it is. I would recommend that you approach an attorney who is well versed in property law to advise you whether it is legal or not and whether all the correct processes have been followed to make the payment of levies legal and binding. 

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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