Sectional titles remain one of South Africa’s most popular property ownership models, offering community-style living, shared security, and reduced maintenance burdens. However, arrear levies are the biggest ongoing challenge that can disrupt even the best-run schemes. Overdue payments from sectional title owners to the body corporate are not only an administrative challenge but also carry significant legal and financial consequences for both owners and the scheme.

Why are arrear levies more than just “unpaid bills”?

Levies fund the essential services of a sectional scheme, such as property maintenance, security, insurance, and contributions to the reserve fund. When owners fail to pay, the body corporate’s financial health weakens, putting all owners at risk. A shortfall in funds may force trustees to delay maintenance, dip into reserves, or, in severe cases, raise special levies that penalise compliant owners.

The Sectional Titles Schemes Management Act (STSMA) makes levy collection non-negotiable. Trustees are legally obliged to collect outstanding levies on behalf of the body corporate. This duty cannot be waived, even if trustees sympathise with an owner’s financial struggles. Ignoring arrears exposes trustees to criticism from compliant owners and could even be challenged as a breach of their fiduciary duty.

The legal framework for collection

South African law provides a structured process for collecting arrears, primarily through the STSMA and the Sectional Titles Act (STA). The collection process starts with notifying owners of overdue levies, followed by final demand letters issued by the trustees or managing agents without owner consent. If arrears remain unpaid, the body corporate can proceed with legal action by applying for judgment in the Magistrates’ Court or High Court.

This may result in consequences such as:

• Interest charges on overdue accounts.
• Negative listings with credit bureaux.
• Court judgments leading to garnished wages or attached assets.
• In severe cases, eviction if arrears spiral into insolvency.

Importantly, the body corporate also has a powerful safeguard: the levy clearance certificate. When an owner wishes to sell their unit, the registrar of deeds cannot transfer ownership until all arrears are settled or secured. This provision ensures that the body corporate ultimately recovers outstanding funds before ownership changes hands.

The current situation worsens

Due to rising living costs and high interest rates, many South African homeowners struggle to make ends meet. A recent case highlighted challenges in a sectional title scheme, where several owners fell behind on levies as rising expenses placed unexpected pressure on household budgets. At first, trustees hesitated to act, hoping the arrears would resolve themselves. Months went by without recovery, while the scheme struggled to cover the basics such as security and garden maintenance.

Compliant owners grew frustrated, while defaulters faced mounting interest charges and the threat of court action. Eventually, one owner in arrears attempted to sell their unit, only to discover that the sale could not proceed without a levy clearance certificate. The arrears, plus additional legal fees, had to be paid before the transfer could go through.

This double-edged reality shows how arrears pressure the entire community, but the law provides clear mechanisms to ensure eventual recovery. Delayed action by trustees only compounds the problem. Meanwhile, owners who ignore arrears face growing financial and legal consequences. At the end of the day, levy payments are about more than keeping the lights on – they safeguard property values, ensure financial sustainability, and preserve the shared benefits that make sectional title living attractive in the first place.

The risks of unlawful action

Some trustees, under pressure, resort to drastic measures such as cutting off water or electricity to defaulters. While understandable, these actions are illegal and expose the body corporate to costly lawsuits. The law is clear on the formal processes of levy collection set out in the STSMA and STA. Acting outside of these boundaries undermines community cohesion and leaves the scheme vulnerable.

Sectional title arrears remain a pressing issue across South Africa, exacerbated by high living costs and financial strain. The law provides a roadmap for trustees to act decisively within the framework of the STSMA and STA, ensuring levy collections are pursued through lawful channels.

For owners, the message is equally clear: levies are not optional. Falling into arrears can damage your credit record, expose you to legal action, and even prevent you from selling your unit. For trustees, timely and lawful action not only protects the body corporate’s financial health but also preserves the stability and harmony of the community.

 

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