By the Paddocks Club team
Below are examples of two questions on the Paddocks Club discussion forum, to show you what is available to our Community members!
Trustee in arrears and still defaults on repayments
There is a trustee who is in arrears with his levies and was handed over to the lawyers for the collection of the outstanding levies. He makes one payment and then continues to default on his arrears. This person is insisting he will remain as a trustee and we feel the situation is detrimental to the body corporate. Is he still permitted to remain as a trustee given he has to vote on certain issues at meetings and might be in conflict with certain agendas regarding levy collections whilst being in arrears himself?
A person ceases to be a trustee if he or she does not pay arrears in spite of a court or adjudicator’s order. The position is not reversed once they pay, as set out in prescribed management rule 6(4)(f).
Section 3(2) says the body corporate may recover arrears by applying to the Community Schemes Ombud Service for an order so that is what the trustees should do, having notified that person as required in prescribed management rule 25(2).
A trustee may not vote in a trustee resolution, or even attend the part of a meeting at which that matter is discussed if he or she has a personal interest in the matter, according to prescribed management rule 6(3) and prescribed management rule 14(3)(b).
Hope this helps to clear things up!
Overdue levies in a Sectional Title
We have just had our annual general meeting and have made a few amendments to our conduct rules. One of them is in the levies section where it states the following:
“Levies are due in advance on the first of each month and are payable within 5 days after which interest, at a rate determined by the trustees, will be payable on overdue accounts.”
We want to change that to put in a percentage of what we can charge per month.
Can you let me know what the minimum and maximum are, that we can charge per month?
There is no need for this rule as the prescribed rules deal with the issue.
Prescribed management rule 21(3)(c) allows the trustees to charge interest on arrears and provides for the maximum rate. The maximum rate regulated by the National Credit Act for incidental credit (which is the accepted rate) is 24% per annum, which is 2% per month. This is also the rate charged by the Community Schemes Ombud Service for arrears on its levy.
Prescribed management rule 25(1) says the trustees must notify the members in writing of their liability to pay the contribution, what it is and the interest that applies.
Article reference: Paddocks Press: Volume 13, Issue 6.
Professor Graham Paddock, Anton Kelly, Zerlinda van der Merwe and Ané de Klerk 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.