Legal background
The body corporate’s power to prevent the transfer of a unit if the selling owner owes any money to the body corporate, is contained in section Section 15B(3)(a)(i)(aa) of the Sectional Titles Act, 95 of 1986 (the Act).
It says that the Registrar of Deeds may not transfer a sectional title unit unless the conveyancer handling the transfer has certified that there is no money owing to the body corporate in respect of that unit, or if there is, that an arrangement for payment has been made and the body corporate is satisfied with that arrangement.
In order to be able to make that certification, the conveyancer requests a written assurance from the trustees, or managing agent if there is one, that the owner does not, in fact, owe any money. This written assurance is what is commonly referred to as the levy clearance certificate.
Section 15B(3)(a)(ii) is also a clearance certificate but it applies, not to owners who want to transfer their units, but to developers who hold rights to extend the scheme in terms of section 25. Section 37(1)(bA) says the body corporate must charge the developer for any expenses it has in respect of the area subject to the future development rights. These could be substantial costs: a simple example is the water supplied during the construction of the building/s in the phase. The Registrar may not register the cession of the whole or part of that right unless the developer has paid everything it owes to the body corporate.
Uses
It is significant that the “levy clearance” provision in the Act refers to “all monies”, not just “contributions”. This means that non-payment of any costs, or potential costs to the body corporate, can be cited as the reason to withhold the certificate until those amounts have been paid. An example could be damage to common property that the body corporate would otherwise have to pay for to repair.
Additional Uses
While the levy clearance certificate, strictly, can only be withheld if there is money owing, it is also a useful tool to get other things.
Most managing agents resist the conveyancer’s request for the figures of amounts owing up to the anticipated date of transfer until the conveyancer has provided them with the name, domicilium address and contact details of the new owner, preferred method of delivery on the levy statement and, very usefully, a copy of the rules signed by that person. The managing agent will have a checklist of items such as these, and won’t release the clearance certificate – and thus delay the transfer – until all the items on that list have been taken care off.
The turnover of sectional property is quite high. The threat of not issuing a clearance certificate is a useful tool get owners to pay amounts owing.
Article reference: Paddocks Press: Volume 10, Issue 5, Page 2.
Anton Kelly is an extremely knowledgeable specialist Sectional Title and HOA teacher and consultant. Having been the lead teacher on all the Paddocks courses for the last 5 years, Anton lives and breathes Sectional Title and HOA law, all day every day. There are not many issues he hasn’t come across before.
This article is published under the Creative Commons Attribution license.
15 Comments.
Dear Anton. This is, respectfully, not rocket science. What about cash-flow prior to transfer of the unit, if ever?
HI
Can a Body Corporate or Home Owners withhold consent if the current owner is in breach of the management/conduct rules or constitution until the owner corrects the issue that caused the breach?
Dear Nicky,
Thanks for your comment. With regard to a body corporate, in terms of the Sectional Titles Act, a levy clearance certificate is only withheld should there be arrear levy contributions and other amounts. With regard to a homeowners’ association, it would depend on the governing documentation ie: Constitution or Memorandum of Incorporation.
Regards,
Paddocks
https://paddocksblog.com/2017/03/01/levy-clearance/
Please kindly explain the above link to me. I tried to make an arrangement with the managing agent on behalf of the body corporate but my offer was declined/denied so now the managing agent/body corporate is withholding the levy clearance certificate and is trying to stop the sale of my property. I can forward you the email wrt this if it would help.
Thank you,
Kind regards,
Donovan
Hi Donovan,
Thanks so much for your comment. Please do send the info on to our legal team at consulting@paddocks.co.za, along with any other relevant info, and we will provide a no-obligation quote for the assistance.
Kind regards
Paddocks
Hi,i would like to have your assistance with regards to obtaining clearance certificate,my email is pinoza.liphoko@gmail.com
Hi Pinnie,
Thank you for your comment. If your body corporate is withholding the levy clearance certificate, we can assist.
Please email us your matter to consulting@paddocks.co.za.
Kind regards,
Paddocks
Hi is the levy clearance admin fee legal? If yes do we have a prescribed amount.
Hi Cynthia,
Thank you for your comment. We would love to help, however we do not give free advice. Here’s how we can help:
– We offer consulting via telephone for R490 for 10 minutes. Please call us on 021 686 3950.
– We have Paddocks Club, an exclusive online club, to help you get answers to your questions about community schemes.
Kind regards,
Paddocks
Our HOA is withholding our levy clearance certificate because they do not have our council stamped renovation plans??
Hi Sandra,
Thank you for engaging.
That’s a great question. This is something our attorneys would be able to assist with. Please email us on consulting@paddocks.co.za with regards to your matter, and we can provide you with a no-obligation quote, so that we can assist you.
Kind regards,
Paddocks
Good day
I had paid my levy on the 8th of the month and i was charged R140.00 for late payment
Can the managing agent fine me
Hi Max,
Thank you for engaging.
This is something our attorneys would be able to assist with. Please email us on consulting@paddocks.co.za with regards to your matter, and we can provide you with a no-obligation quote, so that we can assist you.
Kind regards,
Paddocks
Hi
I am Selling my house in a sectional title, my account is fully paid up to date. We pay all fees over to a body corporate who in turn pays the HOA.
My issue I am having is that the Body Corporate is behind in payments to the HOA, and Now the HOA is refusing to issue a certificate for sale of the house to myself even though all my accounts are up to date.
Is there any legal footing to stand on against the HOA denying this request?
Is this something you can help with?
Hi Jared,
Talk to and get advice from your transferring attorney who should be dealing with the body corporate to get the required clearance.