In South Africa, levies in sectional title and similar community schemes are the cornerstone of funding for maintenance, operations, insurance, and future repairs. However, when levies are increased, particularly when the increases appear excessive, owners often struggle to understand how they are regulated and what rights they have under the law.
In terms of the Sectional Titles Schemes Management Act 8 of 2011 (“the Act”), a body corporate is required to establish and maintain an administrative fund that is reasonably sufficient to cover the estimated annual operating costs of the scheme. Section 3(1)(a) of the Act provides that these costs include, among others, the maintenance and repair of common property, the payment of rates and taxes, insurance premiums, and the fulfilment of any other statutory or contractual obligations.
The body corporate must determine the amounts to be levied in proportion to each owner’s participation quota. In accordance with the Act, owners are obliged to make contributions to the administrative fund once the levies have been properly approved. Levies become legally due and payable only after the trustees of the body corporate have passed a resolution approving them. In practice, levy amounts are based on the body corporate’s budget for the financial year, which must be approved by owners at the annual general meeting (AGM) by way of an ordinary resolution.
It is important to note that the Act distinguishes between a levy in the ordinary sense as discussed above and a “special contribution” levy.
A special contribution is defined as any contribution other than one arising from the approval of the estimate of income and expenditure approved at an AGM of the body corporate. It is typically imposed during a financial year to address unforeseen or emergency expenses that were not included in the approved budget, such as urgent repairs or unexpected financial obligations that cannot reasonably be deferred.
A special contribution becomes due upon the passing of a trustee resolution levying such contribution. The body corporate may recover the amount from owners who held ownership of units at the time the resolution was passed, including through an application to the Community Schemes Ombud Service.
While owners are legally obliged to pay levies, the law also provides mechanisms to ensure accountability and to challenge excessive levy increases, improperly imposed, or the result of mismanagement. One such mechanism is found in Prescribed Management Rule 26(2), which requires the body corporate to make its books of account and records — including AGM minutes — available for inspection and copying by any member, registered bondholder or the managing agent upon request. This level of transparency is essential in assessing whether levies have been properly calculated and authorised.
Owners also have the right to participate in levy-related decision-making through their voting rights at AGMs, where budgets and ordinary levies are approved, as well as at special general meetings (SGMs) convened to address urgent matters. It is therefore crucial that owners attend meetings and exercise their voting rights, as levy increases may not be implemented without compliance with the prescribed management rules and properly convened resolutions.
Finally, owners who believe that levies are excessive, incorrectly calculated, inconsistent with participation quotas, or imposed without proper authority may lodge a dispute with the Community Schemes Ombud Service, established under the Community Schemes Ombud Service Act 9 of 2011. The Ombud has the power to require the body corporate to justify levy decisions, to set aside or amend such decisions, and to grant appropriate relief in cases involving financial or governance disputes.
Levy increases in community schemes, whether ordinary or special, are governed by a clear statutory framework designed to balance the financial sustainability of the scheme with the rights of owners. While owners are required to contribute to levies, they are also protected by legal requirements relating to budgeting, approval processes, transparency, participation in decision-making, and access to dispute resolution through the Community Schemes Ombud Service.
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