Community schemes · Legal Insights

What happens when a body corporate cannot recover levies?

By Thifhelimbilu (Meshack) Nembudani

Levies fund the ordinary operation, maintenance and financial obligations of a sectional title scheme. Persistent non-payment can affect the body corporate's ability to meet those obligations.

Start with accurate records

Trustees and managing agents should ensure the levy account, resolutions and supporting statements are accurate. A dispute over how amounts were raised or allocated may make recovery more difficult.

Recovery options

Depending on the facts and applicable rules, a body corporate may consider written demands, dispute resolution processes, and court proceedings for outstanding levies. The appropriate forum and method must be assessed before action is taken.

When the problem is wider than unpaid levies

Where a scheme faces serious management or financial difficulties, section 16 of the Sectional Titles Schemes Management Act 8 of 2011 provides for court-appointed administration in appropriate circumstances. Administration is not automatic: the statutory requirements and evidence must be established.

Good records support better decisions

Up-to-date financial statements, debtor age analyses, budgets, creditor positions and maintenance information help the body corporate and its advisers understand whether ordinary debt recovery is enough or more extensive intervention may be necessary.

This article provides general information about South African law. It is not legal advice. The outcome of any matter depends on its facts, the applicable law and the court's discretion. Legal instructions are subject to appropriate checks and formal acceptance through the practice at which I work.

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