In order to understand levy collection in a sectional title scheme, one first need to understand the function of the trustees in determining and raising levies and the expenses that levies relate to.
Trustees are elected to represent the members of the body corporate, and one of their most important functions is to establish funds for the repair, upkeep, control, management and administration of the common property.
Trustees are also responsible for the payments of rates and taxes, insurance, water, electricity, and other services that the building requires.
Additionally, trustees may determine the amount of money to be raised for the aforementioned purposes, and will then raise the levy contribution on the owners in proportion to their participation quota.
Section 3 of the Sectional Titles Schemes Management Act sets out the functions of the body corporate, which must be performed by the trustees in terms of Section 7(1) of the Act.
The Sectional Titles Schemes Management Act introduces the requirements for a reserve fund, which contains amounts sufficient to cover the cost of maintenance and repairs of common property.
This amount should not be less than the amounts that may be prescribed by the Minister in the Regulations of the Sectional Titles Schemes Management Act.
In cases where owners are entitled to the right of exclusive use, it is necessary to defray the costs of rates and taxes, insurance and maintenance, as well as the provision of electricity and water.
Trustees may also raise levies in order to extend the scheme in terms of a right reserved as set out in Section 25(1) of the Sectional Titles Act, as it may be necessary to defray the costs of rates and taxes, insurance, electricity and water, in the area of the common property affected.
The Sectional Title Act provides that trustees may make special levies upon on the owners in respect to the expenses not included in the budget for the financial year.
The most noticeable amendments to levy collection in sectional title schemes, is the future statutory requirements for a reserve fund to cover the maintenance and repairs of the common property, as well as the ability to apply to the Community Scheme Ombud Service.
If you have any queries relating to levy collection, or if you want a clarified understanding of the purpose of levies or functions of trustees, contact the experts at Van Deventer and Van Deventer Incorporated.
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