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 trustees use funds specifically collected for painting on other expenses?

Member’s question:

Good day Paddock Team,

We manage a body corporate who collected a special levy for painting when they were still managed by their previous managing agent.

There are more serious maintenance repairs (shifting of foundations) which needs to be done than painting at this stage and the trustees would like to know whether the special levy which was raised for the painting can be utilized to address these issues ?

Your guidance in this matter will be appreciated.

Graham’s answer:

Dear member,

When a special contribution has been raised for painting, the trustees cannot use it for another purpose without owner consent.

The trustees should call a special meeting to take a decision by ordinary resolution approving a revised budget and directing the trustees to spend this amount on the other maintenance issues.

At that meeting the trustees should also explain to owners details of the expenses anticipated due to the shifting foundations and the overall effect these decisions will have on the scheme’s Maintenance Repair & Replace plan.

Graham.

Can a body corporate refuse a clearance certificate because other owners are in arrears?

Member’s question:

Hi Graham

During the process of transfer of a sectional title unit the normal course is to obtain a clearance certificate to indicate that the Body Corporate has been fully paid / arrangement to the satisfaction of the Body Corporate has been made for payment of monies due.

What happens in the instance where the owner of a unit is paid up (or suitable arrangement has been made), but the Body Corporate has unpaid debts to the municipality due to non-payment from other units.

The collection of debts, as all know, is a long drawn out matter, but how does this debt at the council affect the sale of the units?

Can the body corporate withhold the clearance certificate on the basis that the municipal account must first be settled?

Your input / assistance in this matter will be highly appreciated.

Regards.

Graham’s answer:

Dear member,

No, the Body Corporate cannot withhold the clearance certificate on the basis that the Body Corporate has outstanding debt to the local municipality which it cannot pay because other owners have not paid their levies.

However, the Body Corporate can make sure that it has raised levies so as to ensure that it has a levy income stream to offset the outstanding debt and that the departing owner has paid or secured his/her debt to the body corporate in this regard – to make sure that the owner’s share of any outstanding debt has been covered.

Graham.

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Article reference: Paddocks Press: Volume 14, Issue 09.

Graham Paddock is 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.

Back to Paddocks Press – September 2019 Edition.