This article explains how to recover outstanding levies in South Africa and the legal process that must be followed to do so effectively.
It’s of utmost importance that this legal process is followed correctly in order for the collection of outstanding levies to be successful.
A levy is an amount payable by each member of sectional title scheme which is proportionate to the size of their unit.
This is a yearly amount determined by the Trustees of a Body Corporate and must be paid by the owner/member on a monthly basis as a contribution to the running costs of the Body Corporate.
The Sectional Titles Act (STA) currently applies to the conveyancing aspects of sectional title ownership.
However, aspects related to levy liability and the legal process which determines how to recover outstanding levies are now regulated by the Sectional Title Schemes Management Act (STSMA).
According to Section3 of the STSMA, all members or owners of a Body Corporate or sectional title scheme are liable to contribute levies as well as any other additional contributions which have been approved by the sectional title Trustees.
Should a member fail or refuse to pay his or her levies, the member falls into arrears, this creates grounds to initiate the legal process for collection of outstanding levies.
Although issuing a registered letter of demand is not a mandatory step in this legal process, it remains in the Plaintiff’s best interest as it serves as an informal start to the legal proceedings.
In addition, the presence of a letter of demand allows the Plaintiff to claim incurred legal fees as well as an interest rate of 10.5% per year on the outstanding debt from the date of the demand.
The letter of demand must provide the debtor information on the following:
Upon receipt of the letter, the debtor has a period of 14 days in which to respond to the claim either by making full payment of the amount stated in the letter or to enter into a payment arrangement for the outstanding levies. This is in accordance with the STSMA.
The letter must be issued in one of the following ways:
However, it’s crucial that receipt of the letter of demand is acknowledged.
If the debtor does not respond in some way within the 14-day period and according to the letter of demand, a summons is issued, subsequently initiating a formal legal process.
The summons is issued on behalf of the Body Corporate by the Magistrate’s Court in the same jurisdiction that the sectional title scheme is located.
After the summons has been issued, it’s delivered to the sheriff of the court who will then serve the summons on the debtor in question at the unit of the scheme which also serves as the place of summons and execution.
Once the sheriff successfully delivers the summons, the debtor has a period of 10 business days to defend the action. Should he or she not defend the action, a default judgment is typically applied.
Should the debtor fail to defend the summons within the stipulated time period, the Plaintiff may then proceed to apply for a default judgement at the relevant court.
The registrar of the court receives the application and sends it to the Magistrate for consideration.
If the Magistrate is satisfied with the particulars of the claim and accepts the obvious absence of the defendant’s intention to defend the claim, the Magistrate will then issue the default judgement.
Because the defendant is often no longer residing in the unit which is arrears, the issued judgement may not come to the debtor’s attention immediately. However, the judgement is valid for 30 years, allowing the Plaintiff enough time to explore various methods of collection while negatively affecting the debtor’s creditworthiness.
The Plaintiff will proceed to issue a warrant of execution against the debtor’s moveable property once the judgement is obtained.
The sheriff waits to receive the warrant before he or she is instructed to execute the warrant at the debtor’s residential address.
The sheriff will not be able to attach the property of a tenant if the defendant no longer resides at the unit in the sectional title scheme. In such a case, a tracing agent will be employed to learn more about where the defendant is currently staying.
During the sheriff’s first visit to the defendant, he or she will demand that the debtor make the payment of the judgement amount and if this is not possible, the defendant will be required to identify which movable assets may be satisfactory for the judgement amount.
If the defendant does not contact the Plaintiff’s attorney at this stage, the sheriff will then be given instruction to remove all the attached moveable assets which will then be sold.
Should the moveable property not be enough to satisfy the outstanding debt, the Plaintiff may approach the court to have immovable property deemed unacceptable.
Once the debtor’s moveable property has been sold and is insufficient to cover the outstanding amount, a Section 66 application may be brought against the debtor and the court is requested to declare the debtor’s unit in the sectional title scheme as executable and suitable to be sold at an auction to cover the levies owed.
Although this is often the last resort, it may be required should the debtor not make arrangements to settle the arrear levies owing.
It is a legal requirement for all members or owners of a sectional title scheme to pay their levies as agreed upon by the trustees.
These levies are contributions towards the running and maintenance of the sectional title scheme and are, therefore, not negotiable.
For more information about our expert, comprehensive legal services, please don’t hesitate to contact our attorneys in Cape Town and Johannesburg.
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