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I pay levies to the Community Schemes Ombud Service - Why and how?

I pay levies to the Community Schemes Ombud Service

Quite a few people in South Africa currently live in housing schemes like sectional title development schemes, share blocks, home or property owners' associations and housing co-operatives. In these schemes, the use of and responsibility for land and buildings are shared.

To improve the management of these types of housing schemes, the Community Schemes Ombud Service Act No. 9 of 2011 (hereinafter “the Act”) was brought into force on 7 October 2016. The regulations, and the Act itself, were drafted with the purpose to provide a dispute resolution mechanism, to promote and monitor good governance and to provide education, information, documentation and services to raise awareness of persons who have rights and obligations in community schemes.

Generally, people are aware of the existence of the Community Schemes Ombud Service (hereinafter “CSOS”) and that levies must to paid to fund the CSOS’ operations. Homeowners probably noticed an extra R 40.00 (or close thereto) being charged to their levy accounts. But there is still confusion on why and how.

Why must I fund the CSOS?
By way of example, in October 2016 a hostage drama in a residential estate in Moreleta Park, a suburb near Pretoria, made headlines. By the time it was resolved, four people were declared dead. On further investigation, it was found that residents all knew that the hostage-taker had a history of run-ins with the neighbours and that the shooting that followed was triggered by a dispute over a wall he had built without the permission of the Body Corporate of the scheme.

This is obviously an extreme example, but it highlights the fact that a residential complex can easily turn into a breeding ground for disputes. If these disputes are not dealt with properly, it can lead to a breakdown in the relationships between neighbours, and the mismanagement of the scheme, (as the above example illustrates) boils over into violence. This is merely one of the reasons there is a need for a statutory body that will enable disputes in community schemes to be resolved easily and cheaply.

In the absence of an ombud service, the only recourse for home owners is either formal arbitration or litigation. The CSOS Ombud Service will be funded by a CSOS levy.

Are these CSOS levies payable already?
The CSOS Levy is applied to all Homeowners Associations (NPC or by voluntary association), share block companies or retirement village complexes in terms of Section 29(1)(b) of the Act and became payable as from 7 January 2017.

In terms of Section 59(a) of the Act, every community scheme must pay the prescribed CSOS levies and further in terms of General CSOS Regulation 11(1), it must be paid on a quarterly basis.

Who is really liable to pay the CSOS levies?
The CSOS levies is technically a debt payable by the Community Scheme to the CSOS. It is not an individual debt owed by each home owner. However, the amounts of the levies, and waivers thereof, are calculated with reference to the contributions payable by each individual owner.

The Community Scheme would calculate the amount of the CSOS levies owed by the scheme and take the necessary administrative action to raise the levies; so that the owners become legally liable to the scheme for their share of the CSOS levy, e.g. in a sectional title scheme, take a trustee resolution levying special contribution and send notices to all owners requiring payment.

Should an owner fail to pay any contribution levied in respect of his/her section or the common property, said owner could be barred from voting at any general meeting.

However, this sanction is only applicable to general resolutions and not special or unanimous resolutions.

An owner who continually defaults in levy payments is effectively being subsidized by the other members of the Body Corporate and said owner will most likely at some stage have to defend him/herself in litigation procedures, instituted by the Body Corporate, to recover the arrear levies and will have to pay the outstanding levies, as well as interest and legal costs.

As is clear from the above, the CSOS is in place to improve the management of community schemes and the CSOS levy is merely a small price to pay to provide schemes with the solutions the CSOS has to offer. Furthermore, we do not advise an owner to refuse this payment if it has been incorporated into your levy through the proper channels by the Body Corporate – it would only lead to you receiving a summons.

© Arinda Truter - Schoemanlaw Inc. - 2018

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