Buying and selling a ST property with a special levy
If you are in the market for a sectional title property, request the minutes from the latest annual general meeting. By doing this, and specifically asking the agent dealing with the sale, you will become aware of any special levies that may currently be payable or become applicable once you take transfer.
The added bonus is that you will not only be able to ensure that the scheme is being run correctly and is financially sound, but you will avoid any nasty surprises.
A special levy is an additional amount of money that may be charged on top of a basic levy, to cover a project, upgrade, or extensive repairs that is outside the normal monthly expenditure of a complex. Cameron Jansen, broker/manager of RE/MAX Central, explains that projects requiring a special levy could range from a security upgrade, to adding a feature such as a swimming pool or club house.
Jansen says that, once trustees have identified a specific project, a general meeting will be organised to make the proposal to the homeowners. “Ideally, the proposal should provide the owners with a detailed breakdown of the expenditure involved, as well as an explanation as to why the special levy is necessary,” he says. “A vote will be held with a quorum of 80% required for the interim special levy to be implemented.”
Once the special levy has been agreed upon, there is the matter of payment. According to Jansen payment of a special levy can be made as a once-off payment, over a three- or six-month period, a year or even longer. This will depend on the general consensus of the homeowners.
When a special levy is being raised or paid at the time of sale, trustees will only issue a levy clearance certificate after the seller has settled any outstanding amount on the special levy. In most cases this is not the ideal situation for a seller, but the seller and buyer can then come to an agreement whereby each party is responsible for a pro-rata share of the special levy.
It is therefore important that the seller discloses any special levies being paid to the buyer, and that the buyer requests information on the possibility of future special levies being raised. This ensures the buyer can make an informed decision, taking all possible costs into consideration before purchasing the sectional title unit.