Recovering levies after deal
5 January 2009

A legal expert explores the issue of recovering special levies when a sectional title unit is being sold.

According to the Sectional Titles Act 95 of 1986 ("the Act") levies are due and payable on the passing of a resolution to that effect by the trustees of the body corporate and may be recovered from the persons who were owners of units at the time when the resolution making the levies due and payable was passed.

This means that the person who owned the unit when the levy became due and payable is the only person from whom the body corporate may legally recover the levy.

This can become a contentious issue when, for example, a special levy is raised and becomes due and payable after an owner has sold his unit but before the transfer of ownership has taken place. As soon as the unit has been transferred from the seller to the purchaser the seller may believe that he is not liable to pay the special levy because he is no longer the owner of the unit. But because the seller was the owner at the time the special levy was raised and became due and payable, the body corporate is legally entitled to recover that special levy only from the seller and has no legal entitlement to recover the special levy from the purchaser as the new owner.

Similarly, if the day after transfer has occurred a special levy is raised for something that occurred "before the purchaser's time" – the purchaser as the owner at the time the special levy was raised and became due and payable is liable to pay the special levy.

To avoid disputes arising regarding levy liability, the seller may assign his levy liability obligations to the purchaser with effect from the date of transfer.

Strictly speaking, the seller and the purchaser are not able to conclude such an agreement on their own. The body corporate must accept the benefits of such an agreement, releasing the seller from his statutory obligation and acquiring a contractual right to recover the outstanding levies from the purchaser. This can be achieved by way of a "tripartite agreement" entered into by the seller, purchaser and body corporate.

Jennifer Paddocks, www.property24.com