Sectional title corner – can levies be hiked mid-year?
I just read the story on HomeTimes entitled, Sectional title corner – can levies be hiked by more than 10%? While I agree that there is no limit to the percentage increase in the act or the regulations, I would like to know if the trustees, or the chairperson in this case, can increase or revise levies in the middle of the financial year? An anomaly was picked up between the floor areas shown on the title deeds, the architect’s drawings and the PQs that were used on which to calculate levies since the complex was under the management of a body corporate almost six years ago. The chairperson increased levies by 10% and decided to do this based on the areas as per the title deeds. There are only 15 units in the complex and by choosing to use the areas as noted on the title deeds, the PQ of two units have increased dramatically. In one instance by 24% and the other by 31% overall. The remaining 13 either remained the same or reduced slightly.
The trustees have refused to seek answers from the architect and surveyor. In the case of the unit where the PQ increased by 31%, an onsite measurement (by myself, a retired civil engineer) appears to confirm the coverage as shown on the architect’s drawings. However, the chairperson of the trustees refused to accept this and unilaterally revised the levies according to the areas shown on the title deeds. When I requested the surveyor to confirm the area he submitted for registration he quoted me a fee of R5,000 to do this.
Ironically, the chairperson’s unit was increased by 37m² by the addition of domestic quarters. Judging by the architect’s drawings, which show the addition as a “revision”, it would appear that the surveyor erroneously added 3m² instead of the 37m² when submitting information to the Surveyor General for registration purposes. He appears to be aware of this and therefore not willing to make corrections.
My questions therefore are:
- Can the chairperson unilaterally revise the levies in the middle of the financial year? If so, does it not require a Special General Meeting where a special resolution has to be taken?
- Does the body corporate not have a responsibility to determine the correct PQs if there is such an anomaly?
- Does the surveyor not have a responsibility to confirm the areas on site against what he submitted to the Surveyor General?
Thank you – Arron
The chairperson has no special rights. It must always be a decision taken by the trustees. And as explained before there are only two instances where the levies can be increased:
- By approving the budget at the AGM and,
- by the Trustees (up to a maximum of 10% at the beginning of the financial year).
But saying that, this example is not one of increasing levies but the correction of levy calculation. The fact that that causes some levies to increase is irrelevant.
The act states in Section 37(1)(d) that the body corporate must raise levies to owners in terms of the participation quotas of their sections. In Section 32 (3) the act again states that the participation quota will determine the levies. In Section 32(4) the act states that the developer (before opening the sectional title register) or the body corporate (by special resolution) may decide on making rules that determine another formula for calculation of levies (we call this nominated values). When there are nominated values we no longer use the participation quotas to calculate the levies.
Section 32(5) states that the participation quotas as shown on the sectional plan will be deemed to be correct unless there is proof to the contrary. It does not say anywhere in the act that the body corporate must ensure that the participation quotas are correct on the plans. It also states that in terms of the Surveyor General (Section 6(2)) that they cannot be held liable if the plans/calculations submitted to them are incorrect.
Saying that, the moment it comes to the attention of the body corporate that there are errors on the plans they must take action. If it was due to an owner(s) increasing the floor area of their sections they must get that owner to follow the correct procedures in terms of Section 24 of the act (special resolution; new sectional plans etc). The owner(s) is liable for payment of the costs in getting the extension properly registered. And only after registration of the new sectional plans can the levies be amended. And it MUST be amended – it is not a trustee decision or a body corporate resolution –as the act states that the levies must be calculated per participation quotas (unless there are nominated values).
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Who is Karien Coetzee?
Karien Coetzee is the national property management consultant at property management company, Trafalgar. She holds qualifications in sectional title schemes management and homeowners association management.