If you own property in a sectional title scheme, you’ve likely asked yourself at some point: “What exactly am I paying levies for?”
The answer is simple on the surface, but the legal framework behind body corporate levies is far more structured than many owners realise. Levies are not optional, they are regulated, and they must be managed and used correctly.
Understanding how body corporate levies work, how they are collected, and what they can legally be used for is essential for trustees, owners, and investors alike.
What Are Body Corporate Levies?
Body corporate levies are regular financial contributions paid by owners in a sectional title scheme. These contributions fund the operation, maintenance, and long-term sustainability of the development.
Levies are typically divided into two main categories.
The administrative portion covers day-to-day expenses such as security, cleaning, gardening, utilities for common areas, and general maintenance.
The reserve portion is set aside for long-term maintenance and major repairs. This includes items like roof replacements, repainting, and infrastructure upgrades.
Together, these funds ensure that the scheme operates efficiently and remains well-maintained over time.
The Legal Framework Governing Body Corporate Levies
The collection and use of body corporate levies are governed by the Sectional Titles Schemes Management Act 8 of 2011.
This legal framework requires bodies corporate to:
- Prepare annual budgets
- Determine levy contributions based on those budgets
- Collect levies from all owners
- Maintain proper financial records
- Use funds only for authorised purposes
Levies are not determined arbitrarily. They must be calculated based on the financial needs of the scheme and approved through the proper governance processes, usually at an Annual General Meeting.
Because levies are legally binding, owners are obligated to pay them once they have been validly raised.
The Law on Levy Collection
The collection of body corporate levies is not optional. Once levies are properly raised, owners are legally required to pay them.
When levies are not paid, the body corporate has a legal obligation to act. Failure to enforce levy collection can create financial instability for the entire scheme.
The typical collection process begins with reminders and formal notices. If payments remain outstanding, the body corporate may implement stricter measures, including interest charges on arrears where permitted.
If non-payment continues, the body corporate may escalate the matter through formal collection processes. This can include handing the matter over to attorneys or collection agencies.
In serious cases, legal action may be taken against the owner. This can result in court orders, attachment of assets, or other enforcement measures depending on the circumstances.
Importantly, unpaid levies do not simply disappear. They remain attached to the property and must usually be settled before a transfer can take place.
What Happens When Levies Are Not Paid?
Non-payment of body corporate levies has consequences not only for the individual owner but also for the entire scheme.
When levies are not collected effectively, the scheme may struggle to pay service providers, maintain common property, or meet its financial obligations.
This can lead to deteriorating property conditions, reduced services, and increased pressure on compliant owners who may need to cover shortfalls.
For the non-paying owner, the consequences can escalate quickly. Interest may be charged, legal costs may be added, and the matter may progress to formal legal action.
Ultimately, consistent enforcement of levy collection is essential for maintaining financial stability within the scheme.
The Law on the Use of Body Corporate Levies
Just as levies must be collected properly, they must also be used correctly.
Body corporate levies can only be used for authorised purposes that benefit the scheme. These generally include:
- Maintenance and repair of common property
- Payment of service providers
- Utilities for shared areas
- Insurance premiums
- Administrative and management costs
- Contributions to the reserve fund
Funds may not be used arbitrarily or for personal benefit. Trustees have a fiduciary duty to ensure that levy funds are used responsibly and in accordance with the approved budget.
Misuse of funds can lead to disputes, financial instability, and potential legal consequences for those responsible.
The Role of Trustees in Levy Management
Trustees play a central role in managing body corporate levies. Their duties include:
- Preparing budgets
- Settling levy amounts
- Monitoring financial performance
- Ensuring appropriate use of funds
Trustees must act in the best interests of the body corporate and ensure transparency in financial decision-making. This includes providing financial reports to owners and maintaining accurate records.
However, trustees are often volunteers and may not have the expertise required to manage complex financial processes. This is where professional property management becomes invaluable.
How Property Managers Ensure Compliance
Professional property managers provide essential support in ensuring that body corporate levies are managed in accordance with legal and financial requirements.
They assist with budgeting by preparing detailed financial projections and helping trustees determine appropriate levy amounts.
Property managers also handle levy collection processes, including issuing statements, tracking payments, and managing arrears. Their structured approach ensures consistency and reduces the risk of financial shortfalls.
By providing professional oversight, property managers help protect the financial stability of the scheme and ensure compliance with applicable laws.
Conclusion
Body corporate levies are the financial foundation of any sectional title scheme. They ensure that common property is maintained, services are provided, and long-term repairs are properly funded.
The law governing levies requires that they be calculated fairly, collected consistently, and used responsibly. When these principles are followed, schemes remain financially stable and well-maintained. Professional property management plays a key role in supporting trustees with levy administration, ensuring compliance, and maintaining transparency.
FAQs
What are the levies for body corporate?
Body corporate levies are contributions paid by owners to cover the costs of maintaining and managing a sectional title scheme. This includes day-to-day expenses, maintenance of common property, and long-term repairs.
Who must pay the CSOS levy?
The CSOS levy is typically paid by owners within a community scheme. It is collected as part of the levy structure and submitted to the Community Schemes Ombud Service by the body corporate or managing agent.
How to calculate body corporate levies?
Levies are calculated based on the scheme’s budget and the participation quota of each unit. Trustees determine the total amount needed to run the scheme, and this amount is divided among owners according to their share in the property.
What is a body corporate levy?
A body corporate levy is a financial contribution required from property owners in a sectional title scheme to fund the maintenance, management, and operation of the shared property and services within the development.
