Arrear Levy Collection Procedure

The purpose of this article is to assure owners who are paying, that there is a collection process and to educate non-payers of the process in recovering levies.

Levies: Few people realise the importance of paying levies in a community scheme. Some even believe that skipping a month or two is not a big deal. This could not be further from the truth. Levies form a vital part of every community scheme and are used to cover various costs within the community scheme, some of which include, security, utilities, repairs and maintenance, admin fees and insurance. Without levies the entire community scheme will fall apart, meaning your investment will go down the drain.

An unfortunate reality is that non-payment of levies is a common occurrence in community schemes and as such arrear levy collection is a necessity. Once an owner’s account falls into arrears and/or the owner defaults on their payment arrangement, it becomes necessary to institute an arrears collection procedure.

The following is the legal procedure for arrear levy collections as set forth by the Magistrates Court:

Step 1: Letter of Demand

A letter of demand is sent to the owner by the Sectional Scheme attorneys, the owner in question is given 10 days to settle the account in full.

Step 2: Summons

A summons is drafted and sent to court, if after 10 days from the letter of demand the account is not settled, the summons is served by a sheriff of the court.

Step 3: Default Judgment

Once the summons has been served the owner in question has 10 days to settle/defend the summons. If in the 10-day period no notice is received from the owner to defend the summons, a default judgement is logged.

Step 4: Warrant of Execution

Once judgement is granted, a warrant of execution is issued by the court and sent to the sheriff of the court for service to attach any moveable property owned by the owner.

Step 5: Tracing of Owners

In the event that a non-service to the warrant is received, the sectional scheme attorneys enlist the services of a tracking agent and re-issue the warrant of execution to the traced address. The re-issued warrant is then sent to the sheriff of the court for service.

Step 6: S65 Proceedings

Section 65 proceedings are an enquiry into the owner’s financial position, this is applied for simultaneously with the first non-service to the warrant of execution as laid out in Step 5.

Step 7: S66 Application

The Section 66 application is an application to the court to grant the property (immovable property) executable.

Step 8: Warrant of Execution Against Moveable Property (unit)

Once the Section 66 application has been granted, the warrant of execution is endorsed against immoveable property i.e. the unit. The warrant is then sent to the court to be issued and the sheriff of the court attends to the service thereof on several parties namely: the owner, tenant, deeds holder, bond holder etc.

Step 9: Attachment of Immovable Property (Unit)

Once an attachment of immovable property has been made, the sectional attorneys obtain a sale date from the sheriff of the court.

Step 10: Sale by The Sheriff Auction of the Unit

Once the property has been sold on auction the conveyancer attends to the transfer of the property, clearance figures are issued and settlement of arrears are paid to the sectional scheme.

It is important to note that any/all legal costs related to arrears levy collection will be billed to the unit owner.

This article forms part of Solvers comprehensive service provided to you – by keeping you informed and up to date with important news, including any changes to the Community Schemes industry.