Thinking Inside the Box

A Paddocks Sectional Title Lifestyle Blog

What?! The Trustees Can Raise a Special Levy WITHOUT Consulting Owners!

Can trustees raise a special levy without consulting owners?

Special levies are the one thing we as sectional title property owners dread more than anything. We understand that we have to pay our general/ordinary levies and we budget for that, but special levies can hit us with no warning whatsoever and none of us like an unexpected call on our pockets that we have not budgeted for!

So when can special levies be legally raised?

Many owners mistakenly believe that the trustees are not entitled to raise special levies without first consulting them.

Sorry to be the bearer of bad news, but they can!

The Sectional Titles Act and Prescribed Rules allow trustees to raise special levies without any prior consultation with owners provided the additional expense is:

1)   Necessary; and

2)   Unbudgeted.

In terms of the ‘necessary’ requirement the expense must not be for something that would be ‘nice to have’. ‘Necessary’ implies a sense of urgency. If the expense cannot wait  to be covered by general levies collected for the next financial year then it may be necessary to raise a special levy for it, pronto!

If the expense can wait until the next financial year, then there is no urgency and the trustees should include it in the next annual budget that will be presented to the owners at the next AGM. This way, if the budget is accepted, the expense will form part of the general levies that each owner pays for the next financial year.

The expense for which the special levy is raised also must not be included in the budget that was approved at the last AGM. Special levies are meant to be for items that pop up unexpectedly throughout the year and not for ordinary and foreseeable general maintenance and repair items already included in the budget and being paid for out of the general levy fund.

Do you have any special levy stories to share with us? Comment below.

Image source: http://www.mjmonaghan.com

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26 comments on “What?! The Trustees Can Raise a Special Levy WITHOUT Consulting Owners!

  1. lucy
    February 20, 2017

    Hi, we have raised a speicial levy for paint to which i am not apposed as our complext in in dire need to maintenance.

    What i would like to know is if that money needs to go into a seperate account. And can the trustees use that money for other items they feel needs to be atteneded to?

    thankS
    Lucy

    • Paddocks
      March 2, 2017

      Dear Lucy,

      Thank you for your comment. We are more than happy to help, however we do not give free opinions / advice. Please email us on consulting@paddocks.co.za with regards to your matter, and we can provide you with a no-obligation quote, so that we can assist you.

      Kind regards,
      Paddocks

  2. Trust
    September 22, 2015

    I don’t mind to pay special levy. The problem is that the Trustees cant be trusted with out money. The previous year they got a contractor that was suppose to do some repairs on the building. Repairs was done halfway and still not finished. Wasted some money there. We complaint for 8 years about gutters that is leaking, it is still leaking. Second contractors on premises last year, did some other work but previous contractors work still not finished. How must we trust them if they waist the money like this

  3. Wilna
    April 29, 2015

    Good day

    A body corporate has raised a special levy and gave the option to pay the amount over a period of 6 month with interest. Are they allowed to do this. There is no dispute on the payment of the special levy , it is just a question of them having the power to raise interest on the amount?
    Thank you kindly
    Wilna

    • paddocks
      June 8, 2015

      Hi Wilna, thanks for your question. We answer one question a day on our Facebook page for free. Please Like our Page on FB and re-post your question on our wall. One of our consultants should answer you within a few days. Thank you!

  4. Tracey
    October 7, 2014

    Our trustees want our complex painted and each owner pay R5000 over 3 mobths ASAP. Is this allowed. Secondly i am unemployed and single so i have no incomecat all. What can they do to me?

    • paddocks
      October 8, 2014

      Hi Tracey, we answer one question a day for free on our Paddocks FaceBook page. Just find ‘Paddocks’ on Facebook, Like our page and post your question on the wall – we will then answer your question in the next few days. Thanks,

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  6. Cindy
    June 22, 2014

    Special Levy for a large amount was raised over a six month period for painting but was used for enclosing stairwells in 2011. Is this legal

  7. FLAF
    March 13, 2014

    To whom it may concern

    I am advising a client on a matter dealing with the raising of special levies. The special levies have been implemented and have substantially increased over the past year. It further appears that the special levies have been apportioned upon owners for other defaulting owners. My client submits that no services/ maintenance is being rendered in the sectional title scheme and he does not know for what the special levies are being used.
    Would you please advise on a potential available avenue should it be determined that the trustees did not raise the special levies in accordance with the requirements of ‘necessity’ and ‘unbudgeted.’ Moreover, is my client obliged to pay for those owners who are defaulting with payment?
    Many thanks in advance

    • paddocks
      March 14, 2014

      Hi there, thank you for your enquiry – if you would like formal legal advice please contact our Paddocks Consulting department: consulting@paddocks.co.za or 021 686 3950 and ask for Carryn. Our consulting team will be able to give you a legal opinion on the matter.

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  9. Michelle
    June 28, 2013

    Hi Deidre,

    I figured you are a MA thus my request for contact details. We looking at replacing the current MA and i like your thinking :))

  10. Michelle
    June 26, 2013

    Hi Deirde,

    Can you give me the name of your company and i will contact you.

    • Deidre
      June 27, 2013

      Hi Michelle,

      I am just a bit nervous that you might be under the impression that we are a company that resolves municipal problems.We are actually managing agents of Sectional Title Complexes and Homeowners Associations.Would you still like our contact details?

  11. Adrienne
    June 13, 2013

    We had a bank slip that required an expensive repair. Due to weather conditions the repair could only be completed over 6 months down the line which meant that the initial approved quote for the job had to be increased. Can we raise an extra special levy to cover the difference in the bank repair without have a further special general meeting?

    • paddocks
      June 13, 2013

      Hi Adrienne,

      Yes the trustees can raise a special levy for this unexpected shortfall and do not need to hold a SGM. I suggest that the trustees clearly explain why the additional special levy has had to be raised when you send out the invoices and give the owners a reasonable time period in which to pay.

  12. fynbospark
    June 13, 2013

    Dankie die uiteensetting is duidelik en waardevol.
    Munisipale Water begroting:
    Ons het wel vir water begroot en kan dus nie ‘n spesiale heffing vir GEWONE water instel, net omdat dit verkeerd begroot is nie.
    Die interessante een hier is dit:
    Die Munisipaliteit kanselleer gratis water vanaf 1 Julie 2013, dit is nou die 6kl per woonstel….. dit gaan ‘n aansienlike impak op ons munisipale uitgawes hê aangesien ons Regpersoon uit 135 eenhede bestaan . Ek sal aanvoer dat dit ‘n noodsaaklike en onbegrote item was, waarvoor die Trustees ‘n spesiale heffing kan instel…
    Adviseer asb.

    Jeanette Buchner, Fynbos Park

    • paddocks
      June 13, 2013

      Hi Jeanette, you’ll have to forgive me as my Afrikaans is shocking! Can you write your question in English please?

  13. Jeanette Buchner
    June 13, 2013

    Dankie die uiteensetting is duidelik en waardevol.
    Munisipale Water begroting:
    Ons het wel vir water begroot en kan dus nie ‘n spesiale heffing vir GEWONE water instel, net omdat dit verkeerd begroot is nie.
    Die interessante een hier is dit:
    Die Munisipaliteit het ‘n gratis water gekanselleer, (dit tree in werking in Julie…..), en ‘n tarief vir die eerste 6kl ingestel waarvoor ons nie begroot het nie en wat op die tydstip van die begroting onbekend was.
    Ek sal aanvoer dat dit ‘n noodsaaklike en onbegrote item was, waarvoor die Trustees ‘n spesiale heffing kan instel.
    Dieselfde geld vir Elektrisiteit en die begrotings daarvoor…..
    ‘n Probleem vir my is ‘n skielike ESKOM verhoging van sê 25% op GEWONE TARIEWE.
    ‘n Spesiale heffing sal NOODSAAKLIK wees, maar is dit NUUT?, want al die “items” bly dieselfde, net 25% hoër!
    Die vraag is, en die antwoord sal waarskynlik JA wees…. kan ons ‘n spesiale heffing instel om ons begroting aan te vul om die skielike hoer waterrekening te delg.

    Groete, Jeanette Buchner & Jurie Hamman Fynbos Park Regspersoon

  14. Michelle
    June 13, 2013

    Municipality have installed a new meter, after six months they have come back and said that our readings was wrong and based on our consumption of the last six months they have done and adjustment for the last three years and given us a bill of R 156 000.00 – Can we implement a special levy to recovery this moneys.

    • paddocks
      June 13, 2013

      Hi Michelle,
      Ouch! Yes, the trustees can and should raise a special levy to cover this unexpected municipal expense as it is necessary to pay it. You don’t want the BC getting penalised with interest and owners having to fork out more than is necessary. Good luck!

      • Michelle
        June 13, 2013

        Thanks for the speedy response – loving this blog already :))

        Just another question for some advise – anyway we can dispute this charges or get some one(service provider) to assist.

    • Deidre
      June 13, 2013

      Hi Michelle,
      Your Municipal Account needs to get reconciled before anything is done.
      The usual areas where mistakes are made on an account like this: Estimates billed and paid for over the preceding three years are often not reversed. The Correct Stepped water tarrif is not applied over 36 months but possibly only stepped over a few months-thus making the charge far higher than necessary.The complex could possibly have have had a leak during the six months which council used for an average and has now used that ( too high ) average over the last 33 months.
      If you could tell me how big your complex is-whether flats or townhouses I could possibly try to compare your water charge-which works out at about R4333 per month with some of the complexes we manage of similar nature.That could also be used to see whether the charge is way off.Once the account is reconciled and if the Trustees are happy that the amount is correct ( or in the ball park figure) you should then be able to do a debt arrangement with the relevant municipality.If you do that the interest stops-which is really nice and any special levy raised could be spread out over the same period council has given you to pay back.This making it much easier for the owners.We tend not to enter into debt arrangements if we believe that there is a mistake with the billing as by signing one you agree you owe the money-so you could be doing the complex a disservice.
      That is why you need to get someone knowlegeable to reconcile the account asap.
      Once you know and understand the problem-assuming there is one-then you can decide whether you want to use someone who works for commission to assist you to resolve the query-or whether you want to try it on your own.I find working on a
      “if I get X amount reversed then you give me X percentage” difficult to accept.
      After all why should the complex pay someone a percentage of “savings” when the charge was fictitious in the first place? We prefer visting council ourselves and have also made use of their recent “roadshows” with some really pleasing results.

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This entry was posted on June 13, 2013 by in Financial, Legal.

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