Legal Articles

Many owners of sectional title homes are currently seeking sectional title levy relief due to the impact COVID-19 has had on their finances.

Sectional Title Levy Relief

Because of the Coronavirus pandemic, household incomes have decreased substantially, loss of employment has increased while personal debt and other living expenses remain steadfast in their position.

Owners of homes in sectional title schemes may be seeking sectional title levy relief to help them cope financially during these difficult times, considering they are still liable to pay home loans and other personal debt commitments.

Sectional Title Act Non-Payment of Levies

So far, countless applications have been made by owners for sectional title levy relief, causing warranted concern regarding the financial future of their sectional title schemes, especially if owners take the risk and decide unilaterally to stop paying their levies.

Therefore, it’s important that trustees take proactive measures by providing a solution to owners in order to maintain a relationship of good will and compromise, while owners should not stop paying their levy without first consulting the trustees or managing agent.

How Can Trustees Provide Sectional Title Levy Relief During COVID-19?

The following are three effective ways for trustees to provide relief for levies during the COVID-19 pandemic:

• Allow for a catch up on arrear levies

Trustees can allow owners to catch up on their arrear levies by an agreed future date without taking any legal action against them. In order to put this into effect, trustees simply need to sign an amended handover resolution with the terms and hand it to the managing agent before instructing him or her accordingly. Trustees may also decide not to charge interest on the specified arrears. It’s advised that this is only offered to owners who are currently in good standing regarding up to date levy payments

• Payment holiday

Trustees may offer owners a payment holiday for a specified period, allowing them to temporarily “skip” payments for those months. However, in order for this to be a fair option, it’s advised that trustees then take the outstanding amount for the skipped months and divide it by the number of months left in the financial year. In order for this to be possible, trustees must assess the scheme’s cashflow to ensure they have enough capital to cover their expenses during this time

• Draft a new annual budget

Trustees may consider drawing up a new annual budget for the scheme with special focus on reducing expenses where possible. Subsequently, they are then able to offer reduced levies for the rest of the financial year. However, this should be seen as a last resort and if possible, an option that should be avoided as it can result in the scheme falling behind on tasks required to protect the value of the investment made by the owners

Van Deventer & Van Deventer Incorporated – Property Lawyers in Cape Town & Johannesburg

COVID-19 has placed immense financial pressure on every person living in South Africa and honouring financial commitments has becoming increasingly challenging.

However, there is little reason for one person to bear the brunt of this turbulent situation. With some communication and compromise, we can ensure that we all get through this pandemic with relative financial stability.

One of the methods that can be used is for trustees to offer owners sectional title levy relief in one of the ways mentioned in this article. For more information, or for expert advice and assistance with drafting a resolution, please contact our attorneys who specialise in property law.