A levy is the amount determined by the Trustees to cover the general costs of running a body corporate per annum. Rates and taxes, repairs, maintenance, insurance and admin costs make up these general costs.
According to the Sectional Titles Act, Trustees are tasked with setting the levy before the end of each financial year and implement it from the first month of each year.
If levies are not collected, the sectional title scheme will not be able to survive thus the importance of this task is highlighted.
Well put simply, a non rental payment only affects the individual owner of a unit, whereas a non-levy payment can affect the entire sectional title scheme and all the units within it.
All facets of the Body Corporate complex will be compromised as the non-levy payment affects the liquidity of the the scheme, the capital appreciation of the units within it.
It will also reduce the chances of other owners buying into the scheme and potentially render the scheme from being unable to pay the insurance premium.
When dealing with non-levy payers, the courts are thus intolerant.
However, what can you do if an owner doesn’t pay his or her levies? Making use of a collection attorney who will take action in line with the Section Title Act along with the Magistrate or Supreme Court Act.
The Collection Attorney will phone the owner, and send a Letter of Demand to him or her. If there is still no success with collecting the outstanding debt then the attorney will issue a summons to the said owner.
Should the summons not be defended after the period of 10 court days by the owner then a default judgement can be applied for on the 11th day.
The owner may not feel much pressure up until this point however once judgement is granted the owner can be blacklisted and his or her assets could be sold in order to obtain the amounts owed.
At this stage the owner may be moved to take necessary action to repay the amounts owed or an agreed to amount as the effects of the judgement will be tangible.
Depending on which court has jurisdiction for the scheme, there are different procedures which need to be followed when executing a non-levy paying owners moveable property.
If this is still not substantial enough to cover the outstanding amounts, then the immovable property can be executed.
However, Cape Town courts are reluctant to grant such orders unless a substantial amount is outstanding, whereas other courts will grant such orders in the event that all other avenues of collection have been futile.
The property could be auctioned in order to obtain any outstanding amounts as part of execution of the immovable property.
Also a garnishee order against the salary of a non-levy paying owner or attaching rental payments that the owner receives from a tenant are other ways of recovering outstanding debt.
However, the courts will be less likely to grant the order if an attempt to attach movable property hasn’t been made.
Finally, the attorney will use arbitration as a means of legally coming to a settlement agreement with the owner in order to obtain the outstanding levy amounts.
The collection attorney will one way or another obtain the debt from the non-levy payer.
Contact us for effective levy collection from non-payers.
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