Arrears levies occur in Sectional Title Schemes when property owners or residents fail to make their scheduled levy payments on time. These contributions are typically used to cover various expenses related to the maintenance, management, and upkeep of the communal areas and facilities within the Sectional Title Scheme, such as common areas, security, landscaping, and more.
Levies are usually set at regular intervals (e.g., monthly or quarterly), and when an individual fails to pay their levies as required, they fall into arrears. This can happen for various reasons, including financial difficulties, oversight, or disputes with the scheme.
Arrears levies can accumulate over time, leading to financial strain on the Body Corporate or Homeowners’ Association, as it may struggle to cover essential expenses with insufficient funds. Scheme Executives are responsible for managing these arrears and implementing strategies to address them, such as communication with delinquent owners, offering payment plans, or taking legal action when necessary to recover the outstanding levies.
“Scheme Executives play a pivotal role in managing the finances of a Sectional Title Scheme and ensuring the timely payment of levies,” says Pearl Scheltema, CEO of Fitzanne Estates. “Their responsibilities are critical for the effective functioning and financial stability of the scheme. Their careful oversight and strategic financial planning are essential to maintaining the financial well-being of the scheme and providing residents with a high standard of living.”
Preventing arrears levies in a Sectional Title Scheme is essential for maintaining financial stability and ensuring that communal expenses are covered. Scheme Executives can take various proactive measures to prevent arrears levies:
- Ensure that all property owners understand their levy obligations and the importance of timely payments.
- Communicate levy due dates, payment methods, and any changes in levies or expenses clearly and well in advance.
- Provide multiple channels for communication, such as emails, notices, meetings, and online platforms, to keep owners informed.
Flexible Payment Plans:
- Consider offering flexible payment plans to property owners who may be experiencing financial difficulties. This can help prevent them from falling into arrears.
Early Warning System:
- Implement a system for identifying owners who consistently miss payments. Early detection allows Scheme Executives to address potential arrears before they become a major issue.
- Issue invoices for levies promptly and accurately. Delays in invoicing can lead to delays in payments.
Reminders and Notices:
- Send out regular reminders and notices about upcoming levy payments. These reminders can help owners stay on top of their financial obligations.
Online Payment Options:
- Make it convenient for property owners to pay their levies by offering online payment options. This can streamline the payment process and reduce the likelihood of late payments.
- Develop a realistic annual budget that takes into account all anticipated expenses and includes a contingency fund for unexpected costs.
- Ensure that levies are set at an appropriate level to cover these expenses while avoiding overburdening property owners.
Regular Financial Audits:
- Conduct regular financial audits to ensure that funds are being managed transparently and responsibly. This can help identify any discrepancies or financial issues early.
- Address disputes and conflicts related to levies promptly and fairly. Effective mediation and resolution can prevent arrears from accumulating due to disagreements.
Education and Support:
- Offer financial literacy workshops or information sessions to help property owners manage their finances more effectively. Providing support and resources can prevent arrears levies.
- Keep property owners informed about the financial health of the sectional title scheme by providing regular financial reports and updates at meetings.
Legal Action When Necessary:
- As a last resort, consider taking legal action against property owners who consistently fail to pay their levies. This action should be used judiciously and in accordance with South African law.
Arrears levies in Sectional Title Schemes have legal implications, and there are specific steps that can be taken according to South African law to address this issue. It’s important for trustees and scheme executives to be aware of these legal aspects.
“It’s crucial to follow the legal processes outlined in the Sectional Titles Schemes Management Act, the scheme’s rules, and any other relevant legislation when addressing arrears levies,” says Scheltema. “Scheme Executives should seek legal advice and consider alternative dispute resolution methods before resorting to legal action. Open and transparent communication with delinquent owners is often the first step in resolving arrears without resorting to legal measures.”
By implementing these preventive measures and maintaining a proactive approach, Scheme Executives s can significantly reduce the risk of arrears levies in a Sectional Title Scheme and promote a financially stable and harmonious living environment for all residents.
Trustee Training Guide – The Essential Guide for Trustees
This is merely a very brief overview of a very complicated topic within Sectional Title Scheme regulations. Fitzanne Estates provides extensive training, guidance, and resources on what is required of Scheme Executives. We go through everything you need to know in great detail, and it will be well worth your time.
Fitzanne Estates has designed a free, downloadable Trustee Training Guide to assist you with everything you need to make a success of your role as a Scheme Executive in a Sectional Title Scheme. Click here to visit the Trustee Training Guide.
More about Fitzanne Estates
Fitzanne Estates (Pty) Ltd is a Property Management Company that can sufficiently administer your property investment to the benefit of the Landlord, the Body Corporate, and the NPC – Non-Profit Company. Services include Letting, Sectional Title Management, Full Title Management (NPC – Non-Profit Company) and Sales.
LinkedIn: Fitzanne Estates
YouTube: Fitzanne Estates
Podcast: Fitzanne’s Property Exchange