By the Paddocks Club team

Below are examples of two questions on the Paddocks Club discussion forum. We want to show you what is available to our Community members!

Owners not paying levies

Member’s question:

Hi Paddocks team,

Can a body corporate name the levy non-payers, with the amounts outstanding, on a newsletter which would be sent to all the owners to remind them to pay their levies on time.

Anton’s answer:

Hello,

I had a chat to Zerlinda about “name and shame”. There’s nothing that prevents the practice and many schemes do it.

However, the Act in section 3(2) provides for the community schemes embed service to be used to collect arrears and prescribed management rule 25(2) provides a process the body corporate must use if a member does not pay by the due date, and it’s not “name and shame”.

The other side of the argument is that this information is available for inspection and copying by any member anyway, so if an owner wanted to, he or she could find out what any other member’s payment record is, but they would have to actively do that.

Zerlinda suggested publishing the total number of owners in arrears and what that amount is, rather than naming names.

 

 

Lease common property and authority by trustees in terms of interest

Member’s question:

Hi,

1. A body corporate has been approached by a marketing agency requesting the rental of part of the common property from where they will hang billboards. The body corporate will then receive a monthly income.

Will this require a special resolution in terms of section 4(h) or will it require a unanimous resolution in terms of section 5(1)(a) as it would seem this provision also allows for the rental of common property. Why two separate provisions allowing for the same thing?

The the main concern is that mention is made of “owner or occupier”(section 4(h)), does this wording limit the lessee to only an owner or an existing occupier (tenant) of a section prior to be allowed to rent parts of the common property?
2. In order to motivate some of the non-paying owners to pay their levies outstanding the trustees want to give discounts on the interest raised on overdue balances.

They want to agree to a specific percentage and offer this across the board. Do they need an owner resolution authorising such discretion of can they act accordingly without owner participation.

Your guidance herein will be appreciated.

Anton’s answer:

Hello

1. You spotted the problem. The short term lease of common property, which now requires a special resolution, is limited to owners and occupiers. The long, registered lease, requiring a unanimous resolution, can be used to let common property to outsiders. But the term is for at least 10 years, probably too long for this situation.

A workable solution is to enter into a servitude of that portion of the common  property in terms of section 5(1)(g) by special resolution. The terms of the servitude can be tailored to suit the situation. You will need an attorney who is a notary and conveyancer, and preferably a sectional title specialist as well, to assist.

2. Prescribed management rule 21(3)(c) allows the trustees to charge interest on any overdue amount, and they can set the rate as long as it does not exceed the maximum rate set in the regulations to the National Credit Act. They have to take this resolution in writing. They can change the rate of interest but again by written resolution.

 

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Article reference: Paddocks Press: Volume 12, Issue 03, Page 04.

Professor Graham Paddock, Anton Kelly, Dr Carryn Melissa Durham and Zerlinda van der Merwe are available to answer questions on the Paddocks Club discussion forum for Community members. Get all your questions answered by joining Paddocks Club.

This article is published under the Creative Commons Attribution license.

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