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Are you obligated to pay arrear levies when purchasing a sectional title unit? Part 1

Recently, the High Court and the Supreme Court of Appeal (SCA) was required to interpret Section 15B(3)(a)(i)(aa) of the Sectional Titles Act 95 of 1986 in relation to a sale in execution in the case of the Body Corporate of Marsh Rose v Arno Steinmuller and others.

The Sectional Titles Act 95 of 1986 stipulates in Section 15B(3)(a)(i)(aa) that the registrar of deeds shall not register a transfer of a unit or an undivided share therein unless he is presented with a conveyancer’s certificate attesting to the fact that, as of the date of registration, the body corporate has certified that all monies owed to the body corporate by the transferor in respect of the said unit have been paid, or that payment has been made to the satisfaction of the body corporate.

In this matter, Mr Steinmuller bought a property in a sectional title scheme sold by the sheriff in a sale in execution. The previous owner of the property owed money to the body corporate of Marsh Rose in respect of arrear levies. The body corporate obtained a judgment against the previous owner for the said amount. When Mr Steinmuller purchased the property at the sale in execution, the judgment debt was still due. The body corporate sent Mr Steinmuller an invoice stating that an amount was owed to them for the property purchased (the clearance figures), which had to be paid before the body corporate would provide the clearance certificate. According to the terms of the sale in execution, Mr Steinmuller was required to pay any levies that were owed to the homeowners’ association or body corporate.

He insisted on receiving the ledgers containing the sums claimed for levies for the specific period, as well as the resolutions passed by the body corporate’s trustees regarding the interest charged thereon. The body corporate declined to give the requested information. It stated that Mr Steinmuller was not yet the owner and therefore not entitled to receive it. Due to this, he filed an application with the High Court of Gauteng, requesting an order directing the body corporate to sign all documents and take the required actions to enable the transfer of the property into his name, against payment of R150 000 into a trust account as security for the levies that the body corporate was owed.

The High Court granted his application with an increase of the sum to be paid into a trust account as security. The judgment debt that the body corporate acquired against the property’s former owner was not included in the sum granted. According to the court’s ruling, a judgment debt is not an obligation owing to the property and thus should not be a burden on the new purchaser. The body corporate appealed to the SCA with the National Association of Managing Agents (NPC) as co-appellant. The SCA ruling will be discussed in part 2 hereof.

While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither the writers of the articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes.

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