How does the body corporate recover fees from a delinquent sectional title owner .Why is it important to recover the debt owed

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1) Quick legal background — who must pay and why

Every owner in a sectional-title scheme is legally obliged to pay contributions (levies) to the body corporate so the scheme can run (maintenance, insurance, security, utilities, reserve fund, etc.). The main law governing levy liability and collection procedures is the Sectional Titles Schemes Management Act (STSMA).

2) Early procedural steps the body corporate should follow (and why they’re required)

The STSMA and the Prescribed Management Rules set out governance and certain procedural duties (for example, trustees must notify owners of levy amounts and due dates within prescribed timeframes). Best practice and the rules require clear written notices so owners can’t later claim they didn’t know what was due. CSOS guidance and the PMRs also require that certain notices and processes be followed before formal enforcement steps.

Typical practical sequence (timelines can vary, but these are common stages):

1. Monthly statements & reminders — continue issuing monthly levy statements. (Paper/e-mail and a clear ledger help later proof.)
2. Friendly reminder → final demand — if the levy is overdue, the trustees/manager send a formal letter of demand. PMR rules require that owners are given notice of levies and the consequences. Early, firm communication often resolves cases without legal costs.
3. Trustee resolution to charge interest / collection fees — if trustees decide, the body corporate may charge interest on overdue amounts (the PMRs permit this but interest must comply with statutory caps such as those in the National Credit Act). The trustees must pass a written resolution to apply interest/collection rules.
4. Negotiation / payment plan / mediation (CSOS) — many schemes try to agree on payment plans; the Community Schemes Ombud Service (CSOS) can assist or adjudicate disputes between owners and bodies corporate. Engaging CSOS can be faster and cheaper than full litigation.

3) When the body corporate uses lawyers and goes legal

If reminders and negotiation fail, the usual escalation is:

• Hand over to attorneys / issuing a formal demand on attorney letterhead — this signals seriousness and often includes an intention to claim legal costs. Many conduct rules and PMR provisions allow the body corporate to recover “reasonable” collection costs from the defaulting owner. Whether every legal cost is recoverable depends on the scheme’s rules and the courts’ reasonableness tests — but attorneys’ fees commonly form part of the claim.

• Summons / court action — the attorneys can institute debt proceedings in the Magistrates’ Court (for smaller debts) or High Court (for larger or complex matters). If the court grants judgment, enforcement remedies become available.

4) Enforcement remedies after judgment (what can actually be done)

Once the body corporate has a court judgment or other enforceable instrument, common remedies include:

• Garnishee (attachment) orders — the court can order direct attachment of funds (a bank account) or of a debtor’s employer salary (emoluments/garnishee) subject to statutory protections for subsistence.
• Attachment and sale of movable property — sheriffs can attach and sell movable assets.
• Sale in execution of the unit — where necessary and after following legal procedures, a sheriff sale of the unit can occur and proceeds applied to pay creditors (this is a serious, last-resort option). In extreme cases the body corporate has in the past applied for sequestration of a debtor; sequestration can result in sale by the trustee of the insolvent estate so creditors are paid in order provided by insolvency law.

Important—transfer and the “levy clearance”: a conveyancer must certify (under s.15B of the Sectional Titles Act) that the seller’s levies are paid or secured; in practice a body corporate can therefore block transfer of a unit where levies are unpaid — the levy-clearance process is powerful leverage. Courts have also limited unlawful use of clearance certificates to force unrelated compliance: the certificate may be withheld for unpaid amounts but should not be used to coerce compliance with non-financial matters. Recent case law therefore requires trustees to use the clearance mechanism correctly.

5) Costs and interest — who pays what?

• Interest on arrears: PMRs permit charging interest on overdue levies, but interest must be set by a trustee resolution and must not exceed the maximum rate set under the National Credit Act (and should be applied in line with the PMRs). That prevents unreasonable “penalty” interest.
• Legal fees & collection expenses: if the scheme’s rules permit it and the costs are reasonable, legal and collection costs can be recovered from the defaulting owner as part of the debt. The courts assess reasonableness if contested. If some costs are disallowed, the shortfall may have to be met from the administrative account (i.e., by other owners).

6) Special situations — tenant, sequestration, mortgage bondholder

• Tenant / rental income: CSOS orders can in some circumstances direct a tenant to pay rent directly to the body corporate until arrears are cleared (co-respondent procedures apply). This is useful when owners rent out units and do not pay levies.
• Sequestration / insolvency of owner: if the owner is sequestrated, the body corporate becomes a creditor in the insolvent estate. Sometimes bodies corporate have sought sequestration to enforce payment; the insolvency process can result in the sale of the unit and levies being paid as a cost of realisation in priority over some claims.
• Bondholders (banks): a mortgage bondholder’s secured claim usually ranks ahead of ordinary levy claims in many execution contexts, but depending on rules of insolvency and sale procedures, the levy claim can sometimes be treated as a “cost of realisation” — specifics depend on the facts and court orders.

7) Why recovering levies matters — the practical reasons (short & long term)

1. Cash-flow & service continuity: levies pay common-area electricity, water, security, cleaning and insurance. Without funds these services fail immediately. (Schemes still have mortgage-like bills to pay.)
2. Fairness & moral hazard: unpaid levies shift costs to paying owners and encourage more defaults if unchecked. Prompt recovery discourages deliberate non-payment.
3. Property values & maintenance: chronic arrears cause deferred maintenance, which lowers rental/value and makes the scheme less attractive to buyers.
4. Insurance & legal risk: if the body corporate can’t pay insurance premiums or municipal accounts because of levy shortfalls, everyone is exposed to much higher risk and costs.

8) Practical, usable tips for trustees (to prevent and manage arrears)

• Adopt clear levy and collection rules in the conduct rules and record trustee resolutions for interest and recovery steps.
• Communicate early and often: consistent monthly statements, and a short first-reminder timeline, cut down disputes later. Keep a clear ledger.
• Use payment plans sensibly: where owners are genuinely struggling, a documented payment arrangement (written and signed) often yields better returns than immediate litigation.
• Use CSOS before costly litigation: CSOS adjudication can be quicker and cheaper for disputes and payment orders.
• If you go legal, check recoverability: instruct lawyers who specialise in sectional-title levy recovery and confirm what costs are likely to be recovered if a matter goes to judgment.

9) What owners should do if they can’t pay

• Tell the trustees early and propose a realistic plan — trustees are often willing to avoid litigation if a sustainable plan is proposed.
• Don’t ignore final demands or court papers — once judgment is granted, enforcement remedies are real and can include garnishee orders or execution against the unit.

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Lake Properties Pro-Tip

Treat levy recovery like managing a building’s “cash arteries” — act early, document everything, and balance firmness with practical repayment options. A small amount recovered early (plus a reasonable repayment plan) usually saves the scheme far more in legal fees, distress and lost value than chasing a large debt later.

If you know of anyone who is thinking of selling or buying property,in Cape Town,please call me 

Russell Heynes 

Lake Properties 

083 624 7129 

ww.lakeproperties.co.za 

info@lakeproperties.co.za 

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