Liability for Levies When a Unit Changes Hands
By Jennifer Paddock
Ordinary Levies
The situation with ordinary/general levies is straightforward as it is catered for the Sectional Titles Act (the Act).
Once the trustees have raised an ordinary levy, a new owner becomes liable for the pro-rata payment of the levy from the date on which ownership changes.
To illustrate what this means in practice I’ll give you an example.
Say the ordinary levies are raised from January to December. Transfer of the unit takes place on 15th May. The seller is liable for levies up until 14th May and the buyer is then responsible for the levies from 15th May onwards.
Simple. Straightforward.
Special Levies
When it comes to special levies there is no provision in the Act catering for change of ownership and therefore it is not as straightforward.
The Act simply provides that the person who is the registered owner of a unit on the date that the trustees raise a special levy is liable to pay it. The problem is that special levies are often raised and made payable over a long period of time and in a number of instalments and during this time ownership of one, or even a number of units, changes hands.
So in order to determine who is legally responsible to pay a special levy the question that you need to ask is:
Who was the registered owner on the date the trustees passed the resolution raising the special levy?
If it was the seller – the seller is liable for all instalments related to that special levy despite the fact that the instalments may continue after they are long gone and they may well not be around to benefit from whatever that money is spent on. It is therefore recommended that the seller factor the quantum of the special levy into their unit’s sale price and pay their special levy contribution off in a lump sum prior to their exit from the scheme.
There is another option whereby the seller can cede responsibility for the remaining special levy instalments to the buyer, but because the body corporate is the party to whom the money is owed, this would need to be arranged via a tri-partite agreement to which the seller, buyer and the body corporate are all parties.
If it was the buyer – then the buyer is responsible to pay for the special levy despite the fact that it could have been raised within days of him becoming the new owner and that he was not involved in any lead-up discussions or decisions relating to raising this amount.
I have also written a blog post about how special levies are raised and the requirements for doing so, which you can read here.
We’d love to hear your experience on how this works in practice. Please share with us by commenting below.
Image source: echo-ca.org
Thinking Inside the Box 
Good day, I am currently in a situation where I am liable for a special levy. My transfer took place in Feb 2016 and the resolution was passed in Dec 2015. The managing agent did not include the levy in the clearance and i was not aware of this special levy. Only in April 2016 i get a letter from managing agent stating that I am responsible for the amount of R4400.00. Is this correct.
Thanks
E.Stephen
KZN.
Hi Edwin,
Thank you for your comment. We would love to help but unfortunately do not give free advice. Please see below for how we can help:
– We offer consulting via telephone for R490 for 10 minutes. Please call 0216863950.
– We have Paddocks Club, an exclusive online club, headed by Prof Graham Paddock, to help you get answers to your questions about community schemes: http://club.paddocks.co.za/
– We offer a Free Basics of Sectional Title short course starting soon: http://www.paddocks.co.za/courses/free-basics-of-sectional-title/
Kind regards,
Paddocks
Hi, we have a unit in transfer but the levies account we have received for clearance is incorrect due a to a faulty water meter that took the body corporate a year to replace ( I have photos of the meter and meter readers sheet saying it is illegible) The difference is a massive R 15000 and the BC and MA are not responding to any emails requesting assistance. We are at a loss, what do we do? I should mention, we are emigrating and will not be in SA to “take legal action)
Hi Candice,
Thanks for your comment. We are more than happy to help, however we do not give free opinions / advice. If you are interested in our opinion, please let me know and I will put you in touch with our consultants. They will then get back to you with a no-obligation quote.
Regards,
Paddocks
Hi. I have bought a property from a sale in execution of the sheriff. Included in the outstanding invoice from the managing agent are levies, special levies, legal fees (from the Trustees trying to sue the previous owner twice for outstanding levies), and interest charged on the outstanding invoices. I am aware that in a sale in execution that the buyer will have to settle the outstanding levies. The question I have is whether legal fees, interest charges and special levies are also to be paid by the buyer.
Hi Jeremy,
Thanks for your question. This article deals only with sale of units via private sales. As you bought your property in a sale of execution, you will be liable for all outstanding costs in respect of the unit. However, the answer to your question can be more complicated than the above, and should you require legal assistance please contact us on consulting@paddocks.co.za.
Regards,
Paddocks
Hi in my case, I purchased a unit and now the transfers are held up because I have to pay R 4100 for special levies. I refuse since I don’t believe I have to pay any lump sum on the special levies, with that being said if after registration they say I should pay monthly or whatever arrangement I won’t have a problem with that. In the OTP that I signed there was no clause that I should pay for the costs that the property already have and special levies forms part of that. Please enlighten me if I’m wrong and if I’m right please help me get this sorted.
Hi Sanele,
If a special levy is running at the time a unit is sold, the selling owner must complete the payment of the special levy before transfer of the unit to the new owner. An alternative could be an arrangement in the sale agreement that accommodates payment of the special levy. And the body corporate must be happy with the arrangement because that is a condition for the issue of a levy clearance certificate.
Thanks,
Paddocks
Question on special levies: if I purchased a unit and moved in last year and the previous management agents made errors in paying minicipal/water and this problem carried on unnoticed for a number of years. Only now was it picked up that there is an outstanding amount of let’s say R300k I am now expected to also cover debt that was not paid long before I purchased. I have one week to raise R30k. Should it not be calculated per resident on the number of years of ownership.
How can I be held responsible for things that happened many years before I moved in?
I think Special Levies continue until registration of transfer whereby one ceases to exist and thereafter the purchaser continues to pay the Special Levy immediately from registration of transfer.
What about Special Interim Levies