How To Make Money

Ordinary levies
We advise that there were recent amendments made to section 37(2) of the Sectional Titles Act (the Act) regarding ordinary levies:-
where the liability for levies was set as from the date the trustees passed the relevant resolution, and applied to owners of units, the holders of exclusive use areas and holders of section 25(1) rights to extend a scheme.

A more significant change made to the said section was the introduction of a proviso which states that on a change of ownership of a unit, exclusive use area or right to extend a scheme the new owner/holder becomes liable for the levy contribution on a pro rate basis from the date of registration of transfer.

The former provision of the Act made the owner/seller liable for the full year's levy contribution so that if the owner/holder sold he/she would still be liable for the levies beyond the date of transfer for the balance of the year's levies. To overcome this unfortunate situation created by the wording of the old section a tripartite agreement was invariably entered into between the seller, purchaser and body corporate whereby the purchaser took over liability from the date of registration of transfer to pay the levies to the body corporate. This welcome amendment has done away with the necessity for tripartite agreements.
Therefore any reference in sale agreements to the purchaser indemnifying the seller against any claims for levies after transfer by the trustees in terms of section 37 of the Act can be deleted.

Special Levies
No real change here except that the new section 37(2A) to the Act specifically states that special levies (now referred to in the Act as "special contributions") become due by owners of units from the date the trustees pass the relevant resolution.

Levies by holders of Exclusive Use Areas (EUA) and of Right to Extend a Scheme
The body corporate has always in terms of section 37(1)(b) of the Act been able to claim from owners of sections entitled to EUA's an additional contribution to the fund as is estimated necessary to defray the costs of rates and taxes, insurance and maintenance including electricity and water unless already being paid by the owners in terms of the Rules.

A new section 37(1)(bA) was introduced by the recent amendment to the Act in terms of which a developer as holder of a section 25(1) right to extend the scheme can be called upon by the body corporate to make a levy contribution and we set out in full the new section which is self explanatory -
"(bA) to require from a developer who is entitled to extend the scheme in terms of a right reserved in Section 25 (1), to make such reasonable additional contribution to the fund as may be necessary to defray the cost of rates and taxes, insurance and maintenance of the part or parts of the common property affected by the reservation, including a contribution for the provision of electricity and water and other expenses and costs in respect of and attributable to the relevant part or parts,"

Bruce Forrest

Meumann White

Tel: 031 202 9245 Fax: 086 685 1760

Email: bforrest @ meumannwhite.co.za

Web: www.meumannwhite.co.za