The AGM decided to charge interest of 5% per month on arrear levies – what is wrong with this scenario?
First of all it is not an AGM decision to make – it is a Trustee decision.
The STSM Act states the following:
PMR 21
(3) The body corporate may, on the authority of a written trustee resolution—
(c)charge interest on any overdue amount payable by an member to the body corporate;
So even if decided at the AGM the Trustees must still pass the resolution to make it valid.
And the next problem is the interest rate they decided on.
The STSM Act states the following:
PMR 21
(3) The body corporate may, on the authority of a written trustee resolution—
(c)charge interest on any overdue amount payable by an member to the body
corporate; provided that the interest rate must not exceed the maximum rate of interest payable per annum under the National Credit Act (2005) Act No 34 of 2005), compounded monthly in arrear;
The maximum rate of interest changes but at the moment it is sitting at the below. So 5% per month compounds to 60% per year – that is much too high
