This is more of a scenario: The owner was handed over to attorneys for not paying his levies and it went to court. At court it was found that the Trustees never passed a levy resolution and the matter was therefor won by the owner and the Trustees had to reverse the levies. How do we prevent this from happening?
The STSM Act states the following about levies (in fact the Act does not even use the word levy – it refers to contributions)
Section 3. (1) A body corporate must perform the functions entrusted to it by or under this Act or the rules, and such functions include—
(a) to establish and maintain an administrative fund which is reasonably sufficient to cover the estimated annual operating costs—
(c) to require the owners, whenever necessary, to make contributions to such funds:
It then goes further to state the following:
- Liability for contributions levied under any provision of subsection (1), save for special contributions contemplated by subsection (4), accrues from the passing of a resolution to that effect by the trustees of the body corporate, and may be recovered by the body corporate by an application to an ombud from the persons who were owners of units at the time when such resolution was passed: 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.
So it is very important to remember that the Body Corporate at the AGM approves a budget – for example – We need R100 000 in levies to be able to cover our expenses. It is then very important that these levies are only valid and liable for payment thereof once a Trustee resolution to that effect has been passed (as per Section 3(2) above) That is why we get the Trustees to sign a Levy resolution to that effect. We then notify all owners of this within 14 days after the AGM (as per the Act).
(1) The body corporate must, as soon as possible but not later than 14 days after the approval of the budgets referred to in rule 17(6)(j)(iv) by a general meeting, give each member written notice of the contributions and charges due and payable by that member to the body corporate, which notice must‑
- state that the member has an obligation to pay the specified contributions and charges; and –
- specify the due date for each payment; and
- if applicable, state that interest at a rate specified in the notice will be payable on any overdue contributions and charges; and
- include details of the dispute resolution process that applies in respect of disputed contributions and charges.
It is also possible for Trustees to increase the levies (with a maximum of 10%) from the first day of the financial year without having to consult the owners. For this we also need to get them to sign the Levy resolution to make these levies valid and legal.
PMR 21(3)The body corporate may, on the authority of a written trustee resolution—
(b) increase the contributions due by the members by a maximum of 10 per cent at the end of a financial year to take account of the anticipated increased liabilities of the body corporate, which increase will remain effective until members receive notice of the contributions due by them for the next financial year; provided that the trustees must give members notice of such increased contributions by notice in terms of rule 25, with such changes as are required by the context;
When handing an owner to attorneys for collection of arrear levies we will have to produce the Levy resolution to court.