SELLERS BEWARE OF AMENDMENT TO S37 OF THE SECTIONAL TITLE ACT

The amendment of section 37 of the Sectional Titles Act 95 of 1986 states:

Any contributions levied under any provision of subsection (1) [ levies and special levies] shall be due and payable on the passing of a resolution to that effect by the trustees of the body corporate, and may be recovered by the body corporate by action in any court (including any magistrate's court) of competent jurisdiction from the persons who were owners of units at the time when [(such contributions became due) was amended to state] such resolutions was passed.

The resolution to set the levy is passed at the AGM (Annual General Meeting), and the levy will be in force until the end of the financial year.

This means that a seller is liable to pay all levies until the end of the financial year, even though the property could be registered during the financial year e.g. a property is sold and registration date is expected in October, however the financial year end of the complex is February the following year. Hence the seller is expected to pay all levies until February.

A way to overcome this problem is to sign an agreement with the buyer to the effect that the buyer will accept to pay all the levies from the time of registration of the property. Should an agreement of this nature be signed by both parties the managing agent can issue a clearance certificate to the expected time of registration e.g. October, and not to the complex's financial year-end.

At a recent seminar, which we attended it was stated by Maria Constas that the buyer can refuse to sign the agreement.

An example of this agreement:

It is agreed between the parties that the Seller shall not be liable for the levies and other costs due and payable to the Body Corporate as from date of registration of transfer into the Purchaser's name.

Accordingly the Purchaser shall be liable and shall pay all levies and other costs due to the Body Corporate from such date.

The Purchaser hereby indemnifies the Seller against any claims in terms of Section 37 of the Sectional Title Act

Signed at ______________________ this _______day of____________

_________________________________________________________

Seller

Signed at ______________________ this _______day of ___________

_________________________________________________________

Buyer

In our opinion, it should have read special levies and not included the normal levies. However to include all the special levies, without considering the reason for the special levy, would be absurd. In future articles we will discuss the effect this amendment has on special levies, giving consideration to factors that should affect whether the seller or the purchaser should be liable for the special levy.