Marisa Ackhurst

The collection of levies in sectional title schemes and who the party is that should be held responsible for the payment thereof is a relevant question in today’s life.

Sectional title homeowners (those owning townhouses, complexes or flats), is charged a levy amount, usually on a monthly basis. This amount covers all complex maintenance costs, building insurance cover, general repairs and the general upkeep of a complex, the common property and units.

According to the Sectional Titles Act of 1986 (“the Act”) the Body Corporate is responsible for establishing an administrative fund that adequately meets these monthly expenses. An owner of a sectional title is liable to pay a monetary contribution towards this fund; ensuring that ample funding is available to fulfil the obligations set forth by the Body Corporate as stipulated in the Sectional Titles Act.

Every unit owner is therefore responsible for paying the levy amount, as well as any Special Levies raised by the Trustees.

An interesting question that arises is: Is a developer required to contribute to the levies?

When we refer to the Sectional Title Schemes Management Act 8 of 2011 (“STSM Act”) it is clear that the developer forms part of the Body Corporate and the STSM Act and its financial obligations are therefore also applicable to the developer.

To answer the question whether a developer can be held liable to pay a levy fee, it is important to differentiate between a situation where a unit/units is/are registered in the name of the developer, and a situation where a developer is only the holder of a right to extend a scheme.

In the event that a unit/units is/are registered in the name of the developer, the developer can be classified as an owner of a unit as stipulated in the Sectional Title Schemes Management Act, 8 of 2011, and as such the developer will be liable to pay a levy for each unit owned.

Where the developer holds the right to extend the scheme, he or she must pay any costs attributable to the part of the common property which will be used for the extension and, if the right or part of the right is ceded to a third party, the Body Corporate must issue a certificate showing that all these costs have been paid before the cession can be registered.

Once a new unit in the extension is complete, the developer has ninety days to register same and, upon registration, is held liable for the levy for that section until it is transferred to a third party. If the developer fails to register the new unit within the ninety-day period, he or she becomes liable for that payment as from the date of completion of the unit.
So yes, a Developer can be required to contribute to the levies of the Body Corporate of a scheme.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.