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!

Can a special levy /contribution be payable over 12 months?

Member’s question:

Good afternoon

Can you please let me know what the maximum period a special levy can be implemented for.

We have a body corporate that wants to do a special levy over 12 months – Are they allowed to do that?

Thanks

Graham’s answer:

Dear member,

A special contribution / levy can only be raised for an amount that needs to be urgently collected, i.e. cannot wait until the next annual general meeting (AGM) to fund it via the admin fund levy. So the period of the special levy should never extend over 12 months, as whatever is required in the next accounting period should not be included, but budgeted for ordinarily.

Trustees sometimes see a “special levy” as being a levy to fund a particular/special expense. This is wrong.

Graham.

Can a developer’s last unit be removed from the scheme?

Member’s question:

Good day Paddocks Team,

We have recently been appointed as the M/A for a sectional title of 21 units.

This sectional title were previously an investment of one owner that decided to sell the units and to register this investment as a sectional title.

After the first general meeting the owner/developer decided that unit 21 must not form part of the sectional title after the budget and participation quota (PQ) have been approved by owners.

What will the steps be to remove this unit from the sectional title? If possible at all?

I will appreciate it if you can assist me in this matter?

Graham’s answer:

Dear member,

It is not unusual for a developer to want to wash his hands of the body corporate, but it is very complex and expensive to remove a unit from a scheme. In practice it is usually impossible.

I suggest that you should tell the developer, who wants to remove unit 21, that his first step should be to talk to the local municipality to see if this is even possible. If it is, then he should go to his attorney to get advice on how it could be done. The technical steps include:

1. Municipal permission for subdivision of the common property to create a new erf around what is now section 21.

2. Body corporate by unanimous resolution alienates the property to be transferred.

3. Section 21 is “destroyed” from a legal perspective, with bondholders’ consent.

4. Body corporate transfers the common property, around where section 21 was, to the developer.

The process requires a number of new sectional plans, unanimous resolutions and substantial legal costs.

In the meantime, you have to manage the scheme on the basis that the developer is an owner, he must pay levies and is bound by the body corporate’s rules.

Graham.

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Article reference: Paddocks Press: Volume 14, Issue 05.

Graham Paddock 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.

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