Dear Mr Lawyer, this is my question: I am the owner of a sectional title, and paid my levies every month as required, until the water started seeping through the ceiling of my enclosed balcony into my section when it rains. The leak was clearly emanating from a defect in the common property.
I asked the body corporate on numerous occasions to repair the defect, yet after four months and a lot of frustration the body corporate still has not done anything to honour this simple request. As a frustrated owner, I resorted to desperate measures, and employed a contractor to repair the property defect and settled the bill myself.
May I withhold my levies for a period to set off the money that is owed to me by the body corporate?
Dear Mr Owner,
Although this action may sound reasonable, the right to stop paying or to set off a debt against levies is not legally justified and owners are not, under any circumstances, entitled to simply withhold levies.
There is no provision in the Sectional Titles Act 95 of 1986 or the rules that gives an owner the right to withhold levy payments. Even if an owner incurs expense in performing an emergency repair to the common property, and believes that the body corporate owes him money, the owner may only set off the debt against the levies once it becomes liquid.
An amount can only be liquid once it has been agreed upon. An owner cannot set off the amount they believe they are entitled to deduct. The trustees, judge or arbitrator must have confirmed the amount.
If Mr Owner does withhold his levies without the amount being liquid, he is subject to the following sanctions in terms of the prescribed rules:
Firstly, the Trustees are entitled to charge interest on arrear amounts at a rate determined by them, and so the defaulting owner may receive a larger account, due to the interest on his arrears, than if he had paid his levies.
What is more, The Sectional Titles Act imposes a positive obligation on Trustees to recover levies from defaulting owners. Not only does the Act empower them to charge interest, the scheme attorneys will most likely issue summons against the defaulter for all costs that the Body Corporate may incur in recovering any arrears.
Secondly, the prescribed management rules provide that, except in the case of special and unanimous resolutions, an owner is not entitled to vote if any contributions payable by him in respect of his section have not been duly paid. Therefore, an owner who withholds his levies is unable to vote for ordinary resolutions in respect of the section that he is withholding levies on.
Mr Lawyer, how does an owner deal with a situation where he believes the body corporate is liable for payment?
A dispute must be declared with the Body Corporate under prescribed management rule 71. Accordingly, the notice of dispute or query must be done in writing. The trustees or Body Corporate then have 14 days, from receipt, to resolve the dispute.
During this period, the parties should meet to try and resolve the dispute. If there is no resolution after the 14-day period, either party may demand that the dispute be referred to arbitration. The decision of the arbitrator shall be final and binding and may be made an order of the High Court.
Owners often fail to speak to the trustees if they have problems with paying their accounts. There are ways of arranging with the body corporate and it is always better to arrange this before the amount outstanding becomes unmanageable.
This article is a general information sheet and should not be used or relied on as 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 financial adviser for specific and detailed advice.