Maximum Rate of Interest on Arrear Levies
by Jennifer Paddock
Hello Thinking Inside the Boxers!
An attorney contacted me recently telling me about a client of his who had been charged interest on arrear levies at a rate of 40.9% per month.
Isn’t that outrageous?!
I decided to create a video tutorial for Paddocks Club to take our members through the law relating to maximum interest rates applicable to arrear levies.
I’ve put the video on YouTube to give my lovely blog followers this important information too.
Click on the image below to watch the video:
Here’s a cheat sheet for those of you who don’t want to watch the video:
1) If the trustees set the rate of interest – the Prescribed Rate of Interest Act applies (the current maximum rate is 15.5% per annum).
2) If the owners by agreement at the AGM or an SGM set the interest rate – the Prescribed Rate of Interest Act does NOT apply and the rate of interest is simply agreed to by the owners.
How much interest is charged on arrears by your body corporate? Comment below.
Thinking Inside the Box 
I came across this article and thought I should share my pain hoping to get advise.
The body Corporate is taking me to court through their lawyers because they was me to settle an amount of levies, water and electricity of R289 579 of which I only have used electricity of R129 424.42 … so basically they charging me R160 154 of interest… I have proposed to settle this by paying R150 000 which is my usage and small interest but they declined my offer.
So I guess we will proceed with the court.
Please advise me of how to deal with this ?
Dear Sbosh,
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
New change: The Dept of Justice & Correctional Services has prescribed a rate of interest of 9, 0 per cent per annum as from 1 August 2014 for the purposes of section 1(1) of the said Act.
Announced in Government Gazette 37831, July 18, 2014
We had no idea, were not informed until now. Do arrear owners receive credit for the interest adjustment backdated to 1 August 2014?
Hi !
I’m glad I came across this .I stay in India and I’ll really appreciate if you could be of some help to me .
I live in a cooperative hsg society .
I was a defaulter not paying my maintainance but not that I don’t at all I did pay with interest with whatever I could afford at that time .
And interest kept piling up up to 20%
Then I managed to clear a whopping 29000 all in one shot.Apart from the payments I made in between from the time the society was formed .
My total amounted to 35 500 but the sec wavered 5000 and said I could pay 29000.only for which he gave me a receipt of full and final payment
The foll month a new committee Was formed and with a new sec treasure.
I got a maitance bill which said Arrears 918500&penal interest on arrears 435700.
For what ?????????
And maintance of 60000 which I paid but on the receipt the treasurer did not put any date period from when to when
I asked them that my payments are up to date produced the bills and receipts
Which don’t help much coz for this year I got another bill of 25542 00
Which of course includes the yearly maintance of 12000.(1000 monthly)
And arrears of 13542.00
I paid the amount of 12000 and he again gave me a receipt without mentioning period ( where as he should have mentioned yearly maintaince paid )
He turns his back and says pay up the 13,542.00.I will then insert the dates
When I asked I want you to give me the details oof my payments from the general ledger he is refusing
He is saying it is mentioned in the bill .
What am I going to pay that 13542 .00 Don’t I have a right yo know ????
Pls help me pls
I have no idea
He. Said next he will charge 1.5 %
This video is unavailable.
Sorry about that.
So now what?
Hi Jennifer
Elmo Stuart’s newsletter dated 31 October cover this topic very well
Regards
Les
This video is unavailable.
Sorry about that.
Hi Jennifer
We have a rule in our amended conduct rules – surely this should be suffice as it took a special resolution at an agm to amend the rules?
Butch
Hi Butch, yes it would suffice as the special resolution and subsequent rule amendment is evidence of the owners setting the interest rate by agreement.
Hi Jennifer
I did comment on this over the weekend but it has disappeared – is there censorship ? 🙂
We put this as a Rule in the Amended Conduct Rules and the rate is 24% per annum – surely this would be permitted as a special resolutions was required to amend the rules.
Butch
Hi Butch, I answered your comment above. Yes, I have to approve all comments before they appear on the blog. Sorry for my delayed approval, I have been SO busy lately that the blog sometimes has to take a back seat! But I never neglect it for too long 🙂
Hi Jennifer
Thx for this news.
We have the interest stated in our amended Conduct Rules and the rate is 2% – i gather because the Conduct Rules have been passed by special resolution of the BC then they are valid and the interest rate cannot be challenged, is this so?
Butch
Hi, what is the maximum interest rate fir special levies?
Hi Theo, the same principles explained in the video will apply to all arrear contributions – whether general levies, special levies or other. ie. 15.5% if the trustees set the interest rate alone, or a rate at which the owners agree.
Interest at the Body Corporate’s current prime rate (Conduct rule approved and registered).