Outstanding Levies - Can A Body Corporate Reduce Or Accept Less Than Full Payments?

The recent Covid-pandemic has affected many people financially due to loss of work, salary cuts etc. Body corporates are still regularly confronted with owners that fall behind in their levies and receive requests for reduced payments. But can a body corporate just accommodate such requests and settle for a lower amount or write off arrear levies?

Non-payment of levies is obviously not desirable for a body corporate as levies are critical to the operation of a scheme and non-payment can in time affect scheme maintenance and the overall financial position of the scheme. A failure to do so will impact on the ability of the body corporate to attend to its obligations such as paying the insurance of the buildings, paying utility bills (where applicable), paying staff or contractors, paying for maintenance etc.

That said, it can also be imagined that within reason a body corporate would be willing to settle for settlement of outstanding levies even if the amount is lower than that owed to the body corporate.

But what is the position in law? In a recent High Court judgment in Pietermaritzburg, the court held that trustees of a body corporate do not have the power to agree to such arrangements as there is no provision in the law that allows for the reduction on the amount of levies due and payable by the owner.

On the contrary, the court held that a body corporate is supposed to enforce full payment of levies by each owner of a unit. The court further reasoned that a body corporate, by allowing an owner to pay lesser levies than the rest of the owners in the scheme, "undermines the uniformity for the common burden that must be shared by all sectional owners to pay their levies, based on their participation quota. This is an intrinsic component of communal living."

The court's view leaves us in no doubt that the default position is that a body corporate cannot engage in any settlement or arrangement by which it accepts less than the full levies due and payable to it.

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