The Levy Collections Process
Body Corporate Collection Process
WHAT IS A LEVY?
In every Sectional Title Scheme, all owners are required to make payment of a monthly contribution to the Body Corporate which funds day-to-day maintenance of the scheme. This monthly contribution is referred to as a levy which will cover the cost of maintenance and repairs of common areas of the scheme as well as administrative costs such as management fees, municipal costs and insurance of the property.
OWNER’S LIABILITY TO PAY LEVIES:
It is of utmost importance for each owner to pay their levy on a monthly basis.
The liability on owners to pay their levies is regulated by the Sectional Titles Schemes Management Act, Act 8 of 2011 (“STSMA”).
In terms of the STSMA an owner/member of a Body Corporate is liable to contribute towards levies, as approved by the Trustees of the Body Corporate, as well as any additional contributions as approved by the Trustees of a Body Corporate. In the event that an owner/member falls into arrears with their monthly levies, a legal collection process will be initiated.
THE LEGAL PROCESS:
Letter of demand
A letter of demand is sent to the owner whose levies are in arrears. The letter of demand can be sent via electronic mail, by registered post, hand delivered or served by the sheriff of the court.
The letter of demand must outline the nature of the claim and the amount owed. The letter of demand must also provide the owner with a specified period of time in which to pay the outstanding amount, alternatively to make a payment arrangement.
In the event that the owner does not respond to the letter of demand, legal action is instituted by way of a summons which is issued out of the Magistrates Court having jurisdiction over the area where the sectional title unit is situated.
Once the summons is issued by the Magistrates Court, it will be served upon the owner by the Sheriff of the court personally or by affixing it to the principal door of the domicilium address.
Request for default Judgment
The Defendant is afforded a period of 10 business day to enter an appearance to defend, failing which, a request for default judgment will be lodged at the relevant Magistrate’s Court.
A request for default judgment will be lodged at the Magistrates Court requesting the court to grant default judgement against the Defendant. A judgment granted against the Defendant is valid for 30 years.
Warrant of Execution
Once default judgment is granted, a warrant of execution against movable property will be issued by the Magistrates Court and served on the Defendant.
The Sheriff of the Court will request the Defendant to pay the outstanding amount and if the Defendant is not able to do so, the sheriff will request the Defendant to point out movable assets which may possibly satisfy the Judgment debt. The Sheriff will supply an inventory to the Plaintiff’s Attorneys, detailing the movable assets that have been placed under attachment.
The Plaintiff’s Attorneys will then instruct the sheriff to remove the attached movable assets and a sale in execution will be held, where the Defendant’s assets will be sold to recover the outstanding judgment debt.