Who pays the special levy when a property is being sold?

Private Property South Africa
Lea Jacobs

The payment of a special levy does not pass on to a buyer if the seller was still the registered owner of the property when the levy was raised.

The payment of a special levy does not pass on to a buyer if the seller was still the registered owner of the property when the levy was raised.

Everyone who lives within a sectional title scheme has to pay levies on a monthly basis. This is understandable as the complex or block concerned has to be maintained. Levies are generally calculated by the trustees of a body corporate at the beginning of the financial year in order to budget for the day to day running of the scheme. However, things can and sometimes do go wrong and there could well be times that additional money is required in order to fund unexpected issues within the complex or apartment block, these are referred to as special levies.

“Section 37(2A) and prescribed Management Rule 31(4B) of the Sectional Titles Act provides the trustees of the body corporate of the sectional title scheme with the discretion to determine special levies by passing a resolution to that effect,” says Mark Robertson, an attorney with Barry, Botha and Breytenbach Inc.

He says the trustees can, however, only pass a resolution for a special levy if they adhere to the following two requirements. The first requires the special levy to be necessary - this means that it must be urgent and cannot wait to be included in the next financial year’s budget. The second requirement is that the expense may not already have been included in the annual budget of the scheme. The trustees further also have the discretion to state whether the special levy should be paid in a lump sum or in installments over a certain time period.

“Generally speaking, special levies are for emergencies only and as such are aimed at dealing with unforeseen expenses or expenses that have been inadequately catered for in the annual budget. They should not be used for maintenance expenses which must be included in the annual budget of the sectional title scheme.”

Whatever its purpose, if the resolution is validly passed, the owner of a sectional title unit will have to pay the special levy. So does this mean that someone who buys into a sectional scheme will automatically be liable to pay a special levy that was implemented before the sale of the property went through?

Robertson notes: “The Sectional Titles Act provides that the person who is the owner of the sectional title unit at the time of the passing of the resolution for the special levy is liable for the full amount of this levy. This means that should a special levy be passed and an owner sells his unit thereafter, that owner remains liable for the full payment of the special levy before the unit can be transferred to the new owner. The Body Corporate of the sectional title scheme can even make such payment a condition for the issuing of the Levy Clearance Certificate needed to enable the transfer of the sectional title unit.”

It does, however, pay to remember that a seller may include a clause in the Deed of Sale stating that any special levies raised after the date of acceptance of the offer to purchase will be paid by the purchaser. In these instances, the purchaser would have to pay the special levy in order to obtain the clearance certificate from the body corporate.

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