Sectional title property presents many problems for landlords when it comes to a small amount of tenants who are living large lives that they cannot sustain, which result in rent, levies and other obligations not being paid. People who only pay their bills when they feel fit, often also adopt a lifestyle of carelessness when it comes to pay their sectional title levies.
Sometimes you may have a true and legitimate reason for being unable to pay your bills but you should still beware, because trustees have a right to enforce strict credit controls and treat all non-paying tenants the same to ensure that the body corporate remains solvent and liquid.
Unfortunately, renters who do not care about the rules, or are living above their means, may suffer the consequences when they are placed under further pressure after the scheme’s lawyers demand payment on outstanding fees.
Tenants who do not keep up with their rent and levies are subject to the Sectional Titles Act Prescribed Management Rules 31 (5) and will also end up having to pay the compound interest on their debt, the legal costs incurred by the owners and their attorneys, and all other costs involved in the recovery the outstanding debt. Further, you will end up with a bad credit reputation that will cost you any future credit applications, which will be turned down by credit providers.
It is, therefore, of utmost importance that you ensure that you contact your trustees, property owners or managing agents immediately when you know that you will fall behind on levies, to arrange a mutual agreement on making future installments. If you do not comply with the agreement and the debt remains unpaid for a long period, the trustees or owners will have no choice but to expel you from the property and proceed with collecting the outstanding moneys.
Therefore, if you are a tenant in financial troubles, beware, because trustees have to be strict and deal with debtors who are not keeping their accounts up to date, quickly to ensure that the body corporate has a cash flow that is secured.
Be clear that body corporates will not tolerate a careless approach to finances, and you may end up having a policy of zero tolerance for defaulters enforced upon you.
Written in collaboration with Ian Teague, Gunstons Attorneys