SPECIAL LEVY LIABILITY IF A UNIT IS SOLD
Category Advice
While sectional title schemes are now meant to have reserve funds in place to deal with maintenance and repairs, there might still be instances (emergencies) where a special levy has had to be raised, but what happens if an owner couldn't afford to pay a lump sum, is paying it off in instalments, and he sells his unit? Who is responsible for the remaining special levy instalments?
The Sectional Titles Management Act is clear with regards to special levies and the collection thereof, says Nelio Mendes, marketing manager of property company SAProperty.com, and it is only by mutual agreement between the buyer, seller and body corporate that these provisions can be adjusted.
The STSMA caters for special levies in Section 3 (3) and provides that "Any special contribution becomes due on the passing of a resolution in this regard by the trustees of the body corporate levying such contribution", and goes further to say that, "Provided that upon the change of ownership of a unit the successor in title becomes liable for the pro-rata payment of such contributions from the date of change of such ownership."
Where an instalment plan is in place, the seller must make the estate agent and the potential buyer aware that the new owner will become responsible for the pro rata special levy instalments - from the date that the buyer takes transfer. Provision should be made in the sale agreement to formalise the acceptance of the responsibility of the special levy instalments from the date that the new owner takes occupation, said Mendes.
An easy example of how a special levy would be pro-rated, is if a unit is sold on the 1st October, with a special levy resolution passed on the 2nd of October, payable in 12 equal monthly instalments starting on the 1st November. If the transfer of the unit is to take place on the 1st January, then the new owner will take over payments of the special levy on that date - which means he pays 10 of the 12 instalments as the original owner would have paid two of the instalments by that stage.
Sale agreements of sectional title properties tend to stipulate that the purchaser becomes liable for special levies once transfer takes place and, as mentioned, it is only by mutual agreement between the buyer, seller and body corporate that this condition can change. It is simpler to stick to the standard way of doing things, and not deviate with complicated alterations to payment plans, advised Mendes.
For further information contact Nelio Mendes on 021 427 1600 or email nelio@saproperty.com.
Author: SAPROPERTY.COM
