Navigating Levy Arrears in Sectional Title Schemes and Homeowners Associations
Levies are the financial heartbeat of every sectional title scheme. They fund the day-to-day services and long-term maintenance that keep a community functioning smoothly, from security and insurance to utilities, repairs, and the upkeep of common property.
When owners fall behind on levy payments, the consequences extend well beyond a single account. Levy arrears can place significant pressure on a Body Corporate’s and Homeowners Association’s finances and, if not managed effectively, may affect the stability, appearance, and overall value of the scheme.
How Levy Arrears Affect a Scheme
A Body Corporate and Homeowners Association remains responsible for paying service providers, municipal accounts, insurers and contractors regardless of whether all owners have paid their levies.
When levy income drops, the shortfall often impacts the entire community. Common consequences include:
- Increased financial pressure on reserve funds
- Delays in maintenance and repairs
- Special levies being introduced to cover operational gaps
- Cash flow strain affecting essential services
- Supplier disputes or interruptions in services
- A decline in property values within the scheme
For this reason, arrears collection is not simply an administrative task. It is a critical part of protecting the financial sustainability of the scheme and ensuring fairness to owners who meet their obligations.
This is why the timely payment of levies remains such an important priority. At Solver Property Services, we continually emphasise the importance of owners meeting their levy obligations to help protect the financial wellbeing and sustainability of their community scheme.
Understanding the Arrears Recovery Process
The recovery of unpaid levies is guided by the Sectional Titles Schemes Management Act (STSMA), scheme governance documents and established legal procedures.
Internal Collection Measures
(Provided that the Managing Agent is a duly registered Debt Collector with the Council for Debt Collectors, or an Attorney)
In many cases,the process begins internally through the Managing Agent or Trustees.
This typically involves:
- Issuing levy statements and payment reminders
- Sending formal letters of demand
- Attempting to negotiate payment arrangements where appropriate
Early intervention is often key to successful arrears recovery. Addressing outstanding balances promptly is generally far more effective than allowing debt to escalate over time, which can place additional strain on the financial stability of the scheme.
At Solver Property Services, we support schemes through a comprehensive collections process backed by an in-house attorney and a proactive, results-driven approach. Through consistent follow-up, regular debtor engagement and early intervention strategies, we aim to maximise recoveries, improve cash flow and support the long-term financial sustainability of the scheme.
The Role of CSOS
The Community Schemes Ombud Service (CSOS) has become an increasingly important avenue for resolving sectional title disputes, including levy arrears matters.
A Body Corporate / Homeowners Association may apply to CSOS for an adjudication order compelling an owner to settle outstanding levies and related charges.
Some of the advantages of the CSOS process include:
- Lower costs compared to court litigation
- A more accessible dispute resolution process
- Legally enforceable adjudication orders
While CSOS can be an effective recovery tool, turnaround times may vary depending on the complexity of the matter and administrative backlogs.
It is also important to recognise that CSOS matters can become procedurally ‘complex’, particularly where the owner in arrears has legal knowledge or experience. In some cases, schemes may find themselves dealing with owners who are attorneys or advocates and who represent themselves during the dispute process. In these circumstances, a poorly prepared application or lack of procedural understanding may place the scheme at a disadvantage.
For this reason, it is important that schemes receive appropriate support and guidance throughout the process. At Solver Property Services, our collections and CSOS recovery processes are supported by in-house legal expertise to help ensure matters are prepared professionally, procedural requirements are met and schemes are placed in the strongest possible position for recovery.
This keeps the tone professional, accurate to CSOS procedure, and positions Solver’s value proposition more credibly.
Civil Litigation as a Recovery Option
Where arrears are substantial, disputed, or require urgent intervention, a Body Corporate / Homeowners Association may proceed through the courts.
This process can include:
- Issuing summons against the owner
- Obtaining judgment for the outstanding amount
- Executing against movable assets where legally permitted
Although litigation may provide effective relief in serious arrears matters, it often involves higher legal costs and longer recovery timelines.
Additional Recovery Mechanisms Available to Body Corporates / Homeowners Associations
Trustees and Managing Agents have several lawful tools available to strengthen arrears recovery efforts.
Charging Interest on Overdue Accounts
A Body Corporate / Homeowners Association may charge interest on overdue levy accounts, provided the interest rate is reasonable and properly authorised in terms of the scheme’s governance documentation.
Allocation of Payments
Under common law principles, payments received are generally allocated in the following order:
- Interest
- Legal and collection costs
- Capital debt
This principle becomes particularly important in long-standing arrears matters or where legal recovery processes have already commenced.
For this reason, keeping levy accounts up to date is not only important for the financial wellbeing of the scheme, but can also assist owners in avoiding unnecessary interest, legal expenses and collection costs. Addressing arrears early is often the most cost-effective approach and contributes towards the financial sustainability of the broader community.
Section 15B(3) Clearance Certificates
One of the most effective recovery tools available is the Section 15B(3) Clearance Certificate.
An owner cannot transfer ownership of a unit unless the Body Corporate confirms that all outstanding amounts have been paid in full. This mechanism often plays a key role in recovering arrears before a property transfer can proceed.
Rent Attachment Orders
Where a unit is occupied by tenants, a Body Corporate may approach the court for an order directing rental payments toward the outstanding levy debt.
Actions Trustees and Body Corporates Cannot Take
Although levy arrears can create serious financial pressure, Trustees and Managing Agents must avoid unlawful collection practices or “self-help” remedies.
Body Corporates may not:
- Disconnect water or electricity without lawful authority. Solver Property Services can however guide you on how to do this legally.
- Act outside the authority granted by legislation or scheme rules
Improper handling of arrears can expose the scheme to legal disputes, reputational harm and financial liability.
Why a Clear Arrears Policy Matters
Every sectional title scheme and Homeowners Association should have a clearly defined arrears collection policy that is consistently applied and properly communicated to owners.
A proactive and structured approach to levy recovery can help:
- Improve cash flow stability
- Reduce financial pressure on compliant owners
- Promote fairness and consistency
- Protect the long-term sustainability of the scheme
Ultimately, effective levy collection is not about punishment. It is about safeguarding the operational and financial wellbeing of the entire community and ensuring the scheme can continue to function in the best interests of all owners.
Solver Property Services understands the financial and operational challenges that levy arrears can create within sectional title schemes and Homeowners Associations. With the right arrears management strategy, Body Corporates and Homeowners Associations can protect cash flow, maintain compliance and preserve the long-term value of their communities. Our team assists Trustees and Managing Agents with professional, legally compliant levy collection solutions tailored to the unique needs of each scheme. Whether it involves proactive arrears management, CSOS applications or recovery support, Solver Property Services is committed to helping communities remain financially stable, sustainable and well-managed.
Contact our team of specialists here for a quote to ensure compliance and stability.
Disclaimer: This article is for general informational purposes only and should not be considered legal advice. Community Schemes should consult professional legal advisors to ensure compliance with applicable laws and regulations.
Solver Property Services is a leading property management company in South Africa, dedicated to supporting community schemes since 2005. For more information, contact us at 010 822 2882 – our expert team is ready to assist you.