Dear Conviction,
I purchased a property in 2010, and at the time, the monthly levy was R960. The complex was managed by a resident who also owned a unit in the complex.
Two years later, that person sold their unit, and the trustees appointed the new owner as the managing agent. Some of us objected to this decision, but unfortunately, we were outvoted—only four of us were against it.
The new managing agent then increased the levies to R1,960, stating that the reason for the increase was the opening of an investment account. I was not happy with this explanation, especially considering affordability. I continued to pay what I could afford at the time, which was R1,500.
Four years later, the new managing agent also sold her unit, and it was discovered that funds had allegedly been misused. A new managing agent was then appointed, and I was informed that I now owed R60,000 in arrears. Despite making monthly payments of R4,500, the legal fees and interest keep accumulating, and my arrears are not decreasing. Their lawyers continue to send me the same letter every month, adding more fees and interest, and they are now threatening to auction my property.
I have requested to pay what I can afford monthly, but they have refused. I would like the opportunity to defend myself in court. I believe there have been serious irregularities with the trustees. There have been no elections since I bought the property in 2010—the same trustees remain in place. It feels as though they treat us as if they own the complex. The constitution is not being followed or implemented, and our voices are ignored.
I would appreciate any assistance in helping me understand my rights and options in this matter.
Law expert Ashwini Singh unpacked the situation as follows:
In terms of Prescribed Management Rule 17 of the Sectional Titles Schemes Management Regulations 2016, body corporates are compelled to hold an Annual General Meeting (AGM) every year, unless the meeting is waived by all members in writing.
At a body corporate AGM, it is compulsory to elect the scheme’s trustees under Prescribed Management Rule 17(6)(j)(viii) of the regulations. If no AGM is being held annually, then an adjudication order can be sought from the Community Schemes Ombud Service (CSOS) to require the body corporate to hold an AGM, as per Section 39(4)(a) of the Community Schemes Ombud Service Act 9 of 2011.
However, if a body corporate member is in arrears and has a judgment against them, that member cannot vote via an ordinary resolution at any general meeting of the body corporate, as detailed in Prescribed Management Rule 20(2)(a)—that is, until the arrears are settled and the judgment is complied with.
A body corporate member who is in arrears with their levy payments can be subjected to legal action for the recovery of their outstanding amount, the costs of which are also borne by the party in arrears.
Debt collection and legal consequences
Prescribed Management Rule 25 of the Sectional Titles Schemes Management Regulations comprehensively sets out the procedure a body corporate can follow for the recovery of overdue contributions. Specifically, Prescribed Management Rule 25(4) states that a body corporate member is liable for the legal costs incurred by the body corporate for the collection of that member’s arrear contributions.
The most cost-effective manner to recover overdue contributions is via an adjudication order in terms of Section 39(1)(e) of the Community Schemes Ombud Service Act, but that does not preclude a body corporate from using the route of a civil court proceeding for the recovery of amounts owed.
If a court proceeding was already instituted against a body corporate member for the recovery of overdue amounts and the body corporate member did not file notice to oppose the litigation, then a default judgment may be awarded to the applicant (aka the body corporate).
As is the case with all court judgments, a default judgment must be complied with. Body corporates cannot debit a body corporate member’s account without a judgment or adjudication order, as noted in Prescribed Management Rule 25(5). Failure to follow the terms of the court order, especially in respect of the payment of costs, can result in a warrant of execution being awarded to the body corporate to attach a body corporate member’s property as part of the cost recovery process.
Seeking legal resolution
About settling a debt, that is best placed before an attorney who specializes in debt collection and the law of insolvency. In terms of Prescribed Management Rule 17 of the Sectional Titles Schemes Management Regulations 2016, body corporates are compelled to hold an Annual General Meeting every year, unless the meeting is waived by all members in writing.
At a body corporate AGM, it is compulsory to elect the scheme’s trustees under Prescribed Management Rule 17(6)(j)(viii) of the regulations. If no AGM is being held every year, then an adjudication order can be sought from CSOS to require the body corporate to hold an Annual General Meeting as per Section 39(4)(a) of the Community Schemes Ombud Service Act 9 of 2011.
However, if a body corporate member is in arrears and has a judgment against them for the same, that member cannot vote via an ordinary resolution at any general meeting of the body corporate, as detailed in Prescribed Management Rule 20(2)(a)—that is, until the arrears are settled and the judgment is complied with.
A body corporate member who is in arrears with their levy payments can be subjected to legal action for the recovery of their outstanding amount, the costs of which are also borne by the party in arrears.
Debt recovery and legal risks
Prescribed Management Rule 25 of the Sectional Titles Schemes Management Regulations comprehensively sets out the procedure a body corporate can follow for the recovery of overdue contributions. Specifically, Prescribed Management Rule 25(4) states that a body corporate member is liable for the legal costs incurred by the body corporate for the collection of that member’s arrear contributions.
The most cost-effective manner to recover overdue contributions is via an adjudication order in terms of Section 39(1)(e) of the Community Schemes Ombud Service Act, but that does not preclude a body corporate from using the route of a civil court proceeding for the recovery of amounts owed.
If a court proceeding was already instituted against a body corporate member for the recovery of overdue amounts and the body corporate member did not file notice to oppose the litigation, then a default judgment may be awarded to the applicant (aka the body corporate).
As is the case with all court judgments, a default judgment must be complied with. Body corporates cannot debit a body corporate member’s account without a judgment or adjudication order, as noted in Prescribed Management Rule 25(5). Failure to follow the terms of the court order, especially in respect of the payment of costs, can result in a warrant of execution being awarded to the body corporate to attach a body corporate member’s property as part of the cost recovery process.
Final considerations
Regarding settling a debt, that is best placed before an attorney who specializes in debt collection and the law of insolvency.
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2 Comments
Is it even allowed for the managing agent of a complex to be a tenant or owner? I thought managing agents were supposed to be independent and trustees were the only ones who could be from the complex.
There is nothing I can recall in the STSM Act or Regulations that prohibits a tenant or owner from being a managing agent in a sectional title scheme. A managing agent is defined as anyone who renders administrative services to a body corporate for reward, therefore there must be a contract confirming the managing agent status of the individual or company appointed therein. Managing agents must also be registered with the appropriate professional body. As far as conflicts of interest are concerned, that is for the managing agent to declare when a conflict of interest arises.