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Pierre
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Pierre77
Joined : 25 Jul 2011
Posts : 7
Location : Cape Town, Western Cape
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Craig Coetzee
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Craig88
Joined : 25 Jul 2011
Posts : 46
Location : Cape Town, Western Cape
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Hi Pierre
There are several ways to collect arrear levies. The 3 main options is (1)handing them over to an attorney, (2) taking out a Stilus Insurance Product or (3) making use of Propell to fund your entire levy roll. Each option has its purpose in the debt collecting process. If it is just one owner that is in arrears, i would use option 1. The challenge is that the body corporate will need to cover the legal fees until the full debt is recovered from the defaulter. This could take as long as three years. If your body corporate is a small complex, then you might have to increase your levies to cover the legal fees and the shortfall of that contribution.
You would then automatically look at Option 2 which is the Stilus product. You pay a minimal monthly premium and the moment someone is in arrears for 2 months, you have the right to make a claim against the insurance policy. You will only need to pay the month permium (as a cost to the body corporate) and everything else is covered by Stilus. Stilus will then pay out your claim within 7 working days. Which means your cash flow is assisted and you don't have to worry about the legal costs that you need to cover. Stilus now does all the debt collecting from their side (021 914 9002).
Option 3 is for body corporates that are in major financial difficulties. They can assist from a finance point of view, but their costs are substantially higher than the Stilus product (021 940 8200).
Give them a call and check.
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Michelle Hendricks
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Michelle571
Joined : 01 Aug 2011
Posts : 2
Location : Cape town, Western Cape
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Craig Coetzee
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Craig88
Joined : 25 Jul 2011
Posts : 46
Location : Cape Town, Western Cape
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Hi Michelle
There are two parts of your post that we need to look at. The first part is the actual special levy that was raised. The trustees have a responsibility to maintenance the complex. If the building needed to be painted and there were not sufficient funds available, they had to raise a special levy. If the building is not looked after, it may cause further damage inside the units and insurance will not pay out because the building was not sufficiently maintained.
If you did make payment arrangements with the body corporate and they still took action against you, then you might have a claim for them to write the legal costs off. But i would suggest you give an attorney a call to discuss this. Talk to a sectional title attorney regarding your matter and they can advise you accordingly. You can probably talk to someone at BBM Attorneys. I don't have their number, but they should be in the white pages or on the internet.
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Vicky
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Vicky01
Joined : 26 Jul 2011
Posts : 5
Location : Cape Town, Western Cape
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Craig Coetzee
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Craig88
Joined : 25 Jul 2011
Posts : 46
Location : Cape Town, Western Cape
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Hi Vicky. In connection with fines, you have to look at your conduct rules as registered at the deeds office. The conduct rules should state how you will go about fining the transgressor (owner and not the tenant) with regards to certain wrong doings. Some conduct rules will state that you will get fined a certain amount if you do not comply with the rules. Example - If you leave your refuse on common property and do not dispose of it in a wheelie bin, you will be fined R250.00. Some rules will state a process that needs to be followed when breaking the rules. So depending on the severity, you will fist get a warning letter, then you will get a notice to a hearing where you will have an opportunity to explain yourself. Some rules will also allow you to review the amount of the fine to be charged on an annual basis at the AGM. If this is not decided at the AGM then the previous year's amounts will apply. As i said; you can only fine if it is registered in your rules. If someone breaks the law, you can call the police.
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Tertius Maree
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Tertius700
Joined : 22 Sep 2011
Posts : 6
Location : Stellenbosch, Western Cape
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Just to add to Craig's quite comprehensive explanation: Fines (penalties) are not allowed against owners unless it is raised in terms of, an according to, procedures set out in a special conduct rule. And unless the procedures in the rule comply with the requirements of the National Constitution and the Promotion of Administrative Justice Act, the fine will not be legally enforceable.I have drafted a template for such conduct rule which is available from rosie@dection.co.za at a charge of R 120.
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Vicky
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Vicky01
Joined : 26 Jul 2011
Posts : 5
Location : Cape Town, Western Cape
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Craig Coetzee
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Craig88
Joined : 25 Jul 2011
Posts : 46
Location : Cape Town, Western Cape
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Hi Vicky. With regards to being a registered debt collector to charge interest. I am not sure if i can give you a correct answer on this as there are many angles to look at this. I would suggest you speak to a sectional title attorney about this. Either Tertius Maree Associates or CK Friedlander. My 5c worth is that body corporate's are allowed to charge interest on arrear levies. If a decision is taken at a meeting to charge interest on outstanding accounts and a resolution is signed, then i believe that there is not a problem charging interest. As long as the interest earned on arrears goes into the body corporate's account. If the body corporate is collecting the interest, then it is not a problem. The debate is if a 3rd party is collecting the interest and charging for letters of demand, etc; then the debate starts about registering as a debt collector. The moment you charge for collecting arrear levies, you need to register as a debt collector.
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Tertius Maree
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Tertius700
Joined : 22 Sep 2011
Posts : 6
Location : Stellenbosch, Western Cape
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A managing agent must be a registered debt collector in order to charge fees for the service. A managing agent can never charge interest for his/her own account, but may do so for the account of the body corporate. In order to charge interest on behalf of a body corporate, a trustees' resolution must be in place by which the rate of interest is determined.
Tertius
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kobus de wet
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kobus303
Joined : 30 Jan 2012
Posts : 2
Location : Meyerton, Gauteng
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Andre Augustyn
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Andre596
Joined : 12 Dec 2011
Posts : 15
Location : Cape Town, Western Cape
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Kobus, this is a scenario that impacts on many bodies corporate and the reasons for the arrears municipal account could be multi-fold, but probably related to either incorrect budgeting and / or alternative expenditure that was expended on budgetary items other than what it was intended for. The financials and managment statements would need to be perused to identify same. The bottom-line is that you are a registered owner and therefor liable for any special levy (warranted or not) at the time of raising same.
Please note that the trustees do not have the power to raise a special levy when a budgeted expense exceeds the estimate approved at the last annual general meeting. They can only raise a special levy for unexpected expenses that were not included in the budget. Should it not be for an unexpected expense, a general meeting should be called (which in practice hardly ever happens). I would request feedback from trustees as to whether the levy called was as a result of an unexpected expense (back dating of municipal charges perhaps?) and if not, indicate to them that special levies are only to be called on basis of an unexpected expense and not an unbudgeted expense. The reality is that the problem exists and eventually all owners will be held liable or face termination of municipal services. If you have a managing agent at the scheme, include aforesaid in your correspondence / dialogue to trsutees. You can also request to be invited to the next trustee meeting to speak at in terms hereof.
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Buks Venter
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Buks776
Joined : 30 Jan 2012
Posts : 1
Location : Cape Town, Western Cape
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Andre Augustyn
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Andre596
Joined : 12 Dec 2011
Posts : 15
Location : Cape Town, Western Cape
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Levies - Kobus, this is a scenario that impacts on many bodies corporate and the reasons for the arrears municipal account could be multi-fold, but probably related to either incorrect budgeting and / or alternative expenditure that was expended on budgetary items other than what it was intended for. The financials and managment statements would need to be perused to identify same. The bottom-line is that you are a registered owner and therefor liable for any special levy (warranted or not) at the time of raising same. Please note that the trustees do not have the power to raise a special levy when a budgeted expense exceeds the estimate approved at the last annual general meeting. They can only raise a special levy for unexpected expenses that were not included in the budget. Should it not be for an unexpected expense, a general meeting should be called (which in practice hardly ever happens). I would request feedback from trustees as to whether the levy called was as a result of an unexpected expense (back dating of municipal charges perhaps?) and if not, indicate to them that special levies are only to be called on basis of an unexpected expense and not an unbudgeted expense. The reality is that the problem exists and eventually all owners will be held liable or face termination of municipal services. If you have a managing agent at the scheme, include aforesaid in your correspondence / dialogue to trsutees. You can also request to be invited to the next trustee meeting to speak at in terms hereof.
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morne erasmus
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morne183
Joined : 11 Jan 2012
Posts : 7
Location : johannesburg, Gauteng
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Andre Augustyn
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Andre596
Joined : 12 Dec 2011
Posts : 15
Location : Cape Town, Western Cape
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Morne - without having information on the precise wording of the special resolution (rule) adopted, it's difficult to formulate an appropriate response. In my view any special resolution adopted in terms of rule adoption, should always be formulated on the 'basis' of levy determination. Should the determination have been that all levies of all sections are devided equally, this will naturally also apply to all future levy increases in correlation with the budget approved per annual general meeting. Although not leggaly prescribed, the amendment of PQ in wholly residential schemes should be calculated purely on the relative extents of the floor areas of sections. In mixed schemes the same principle should apply to the residential sections. That being said, it remains an owners decsion that can at any stage be amended per special resolution as directed per section 32.4 of the Act.
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Loraine Reich
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Loraine596
Joined : 18 Feb 2012
Posts : 5
Location : Durban, KwaZulu-Natal
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Craig Coetzee
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Craig88
Joined : 25 Jul 2011
Posts : 46
Location : Cape Town, Western Cape
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Hi. When a sectional title scheme is registered, the levies are normally calculated as per PQ unless otherwise stated in the management rules. Please look at your management rules as you might have to amend them to allow the pq charge. If you go back to the PQ levy charge, your vote can count more if you vote per poll (and not show of hands). Voting by poll is basically voting as per the size of your section. You need to announce at a special general meeting or the AGM that you would like to vote as per poll.
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