In this article we will discuss strategies for effective levy collection that all body corporates can integrate into their existing collection procedures.
Part of managing and maintaining a section title scheme is collecting levies from the owners on a monthly basis.
Monthly levies are held in the body corporate reserve fund which is used to cover costs related to planned repair and maintenance of the scheme’s common property.
During the annual general meeting held by the trustees of the scheme, the 10-year maintenance plan is reviewed and adapted for each upcoming year and the levies are often based on what maintenance must take place.
Therefore, it's imperative that owners commit to paying their levies on time every month so that the scheme can maintain a healthy financial status while ensuring all repair and maintenance plans are carried out when they have been scheduled to.
However, it’s common for levies to go unpaid for extended periods of time, causing the owners to fall into arrears with their levy payments.
For this reason, it’s important for bodies corporate to have strategies in place for effective levy collection should one or more of the owners fail to pay their levies on time.
It’s important to have strategies in place that can help prevent owners from falling behind on more than one payment.
In this case, it’s often easier to take preventative measures than to try recover arrear levies after a few months.
An effective preventative strategy would be to send out scheduled reminders to all owners of the scheme to remind them about the upcoming due date for levy payments.
Should an owner still fail their levies on time, then a chain of communication must follow. Whether it be by means of SMS, a phone call or email, it’s crucial that the members of the body corporate follow up immediately regarding unpaid levies.
Furthermore, the correct approach would be one of understanding, especially for first time levy defaulters as there may be a reasonable explanation for the late payment.
When owners have failed to pay their levies consecutively, it is referred to as non-payment of levies and this should be addressed with a firmer approach.
A standard practice would be to add interest on the missed payments as a means to discourage owners from missing payments on a frequent or ongoing basis.
Outstanding Body Corporate Levies - How Much Interest Can Body Corporate Charge Me?
In addition, to offer a lifeline to defaulting members who have fallen on hard times, the scheme administrators may attempt to set up a backlog payment plan on an individual basis.
However, if these channels fail, the next step would be to start the process of body corporate debt collection which usually begins with drafting a letter of demand that will be sent to the non-paying owner.
Should this prove to be ineffective, the legal process will be initiated to recover unpaid levies. Bodies corporate should use legal measures as a last resort as it usually incurs additional fees.
How to Recover Outstanding Levies - The Legal Process in South Africa
Effective levy collection is possible with the correct strategies in place to prevent such matters from escalating.
However, our attorneys are able to assist bodies corporate with the collection of unpaid levies in sectional title schemes.
If you would like more information about levy debt collection and how our attorneys can assist you with this process, please contact us.
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