WHEN A PROPERTY
WHO IS LIABLE FOR SPECIAL LEVIES WHEN A PROPERTY IS SOLD?
In transfers where a special levy is payable, the following question often arises, is the seller liable for the special levy or is it the purchaser? After all, the purchaser will be the one enjoying the property and the result of the special levy.
Fortunately, Section 3(3) of the Sectional Titles Schemes Management Act No.8 of 2011, does make provision for special levies and reads as follows:
“Any special contribution becomes due on the passing of a resolution in this regard by the trustees of the body corporate levying such contribution and may be recovered by the body corporate by an application to an Ombud, from the persons who were owners of units at the time when such resolution was passed: Provided that upon the change of ownership of a unit, the successor in title becomes liable for the pro rata payment of such contributions from the date of change of such ownership”.
In interpreting this Section, it can be rightly accepted that it will apply in circumstances where the special levies are to be paid through instalments. In such a case the seller will pay a pro rata contribution towards the special levy until the transfer is registered and the balance will be paid by the purchaser after the transfer of the property.
The Act, however, is silent on circumstances where the special levy is to be paid in a “lump sum”. In such a case, payment of the levies must be done by the seller because he/she was the registered owner at the time the resolution was passed by the trustees/managing agents. This is provided that the seller is the registered owner when payment of the levy is due and payable. The above section only deals with instalments and because the start date and last date for payments to be made is known, it makes it easily applicable to a pro rata payment arrangement.
The seller has a duty to disclose the presence of the special levy before transfer of the property is affected. If he/she fails to disclose same, it will be considered a “latent defect” and the seller may be liable to the purchaser in this regard.
It is therefore advisable for sellers to be mindful of four (4) things when selling their property where special levies are applicable, namely:
does the sale agreement make provision for a special levy?;
the date the resolution was passed;
the date payment is due by the owner; and
would the managing agents be amenable to payments of the levies in instalments?
A solution to any dispute arising from liability would be to enter into an agreement with the seller, the purchaser and managing agent. Such an agreement would clearly detail the sellers and purchaser’s liability for the levy and will avoid potential delays in the transfer.
For any assistance on special levies feel free to contact our offices on 011 - 646 8411
-Philip Da Silva