How to dispute body corporate levies

To dispute a levy, ask the body corporate in writing for three documents: the budget approved at the last annual general meeting, the resolution that set the levies, and a full statement of your account. Most levy disputes are resolved once an owner actually sees how the number was built. If the explanation does not hold up, you apply to the Community Schemes Ombud Service for a binding order. What you should not do is simply stop paying.

How levies are supposed to be set

Under the Sectional Titles Schemes Management Act 8 of 2011, the body corporate is made up of all the owners in the scheme, and the trustees run it on their behalf. Each year the trustees prepare a budget for the administrative fund, which covers day-to-day running costs, and for the reserve fund, which covers future maintenance under a maintenance plan. Owners approve that budget at the annual general meeting, and the levies flow from it.

Your share of the total is normally worked out on your participation quota, which is broadly the size of your section relative to the whole scheme. That is why a large unit pays more than a small one. Some schemes allocate certain costs differently, for example lift costs charged only to the blocks with lifts, but that has to be provided for in the rules.

Trustees may also raise a special levy for an expense the budget did not cover, such as an emergency roof repair. A special levy must be for a genuine scheme expense, and owners are entitled to be told what it is for and how it was calculated.

Levies are payable monthly in advance in most schemes, and interest may be charged on arrears at a rate the body corporate has properly resolved on.

A worked example

Names and figures are illustrative.

Pieter owns a 60 square metre flat in a Johannesburg scheme with 40 units and a total floor area of 3 000 square metres. His participation quota is therefore 2%. The approved administrative budget for the year is R1 200 000 and the reserve fund contribution is R240 000, a total of R1 440 000. His share is 2% of that, which is R28 800 a year or R2 400 a month.

In July his statement jumps to R3 100 a month with no explanation. He writes to the managing agent asking for the budget, the levy resolution and an itemised statement. The reply shows that the trustees resolved a special levy of R280 000 to replace the lift, spread over 12 months. Pieter's 2% share is R5 600, or about R467 a month, which accounts for the increase apart from R233. The agent then finds that R233 is interest charged in error on a payment that was late by one day but within the grace period the rules allow. The agent reverses it. Pieter's dispute is over in three weeks, without CSOS, because he asked for the paperwork rather than withholding the levy.

Grounds that are actually worth raising

Disagreeing with the amount is not a ground. These usually are:

• the levy was raised without a budget having been approved at a general meeting
• your share was calculated on the wrong participation quota or the wrong floor area
• you are being charged for a cost the rules allocate to someone else, or to the scheme as a whole
• a special levy was imposed without the trustees showing what it is for
• the account includes interest, legal fees or penalties that were never validly resolved on or that are excessive
• charges relate to a period before you took transfer, which the seller should have cleared
• the managing agent has simply made a bookkeeping error, which is more common than owners expect

Documents to gather

• your levy statements for at least the last 12 months
• the approved budget and the AGM minutes for the current and previous year
• the trustees' resolution setting the levy, and any special levy resolution with the quotation it relied on
• the scheme's management and conduct rules, including any registered amendments
• the sectional plan or your title deed, which records your participation quota
• proof of your payments and their dates
• the levy clearance certificate and the statement of account from when you bought, if the dispute concerns arrears from before transfer
• all correspondence with the trustees and the managing agent

Step by step

1. Get the paperwork. Write to the trustees and the managing agent and request the approved budget, the AGM minutes, the levy resolution, the maintenance plan and your itemised statement. As an owner you are entitled to scheme records.

2. Put your objection in writing. Be specific. Set out the charge, the amount, why you say it is wrong, and what you believe is correct. Ask for a response within a reasonable period.

3. Keep paying the undisputed portion. This matters. Levies generally remain payable while a dispute is running, and arrears can lead to interest, legal costs, and eventually a judgment against you. Arrear levies also stop the body corporate issuing a levy clearance certificate, which means you cannot sell your unit. Pay what you accept is owing and note in writing that the balance is disputed.

4. Try to resolve it internally. Ask to address the trustees at a meeting, or ask for the matter to be put on the agenda of the next general meeting. Other owners may share your concern about the same charge.

5. Apply to the Community Schemes Ombud Service. CSOS was created by the Community Schemes Ombud Service Act 9 of 2011 to resolve disputes in sectional title schemes, homeowners associations, share block schemes and retirement schemes without going to court. You complete an application form, pay a small application fee, and the matter goes to conciliation first. If conciliation fails, an adjudicator decides it and issues an order that is binding and enforceable like a court order. An adjudicator can order that a levy be adjusted, that an account be corrected, or that the body corporate comply with the Act or the rules. The fee is modest and you do not need an attorney, though either side may bring one.

What the CSOS process looks like in time

Timelines vary with the CSOS office and its workload, but the shape is consistent.

1. Application lodged online or at a regional office, with your documents attached and the fee paid.
2. Acknowledgement and referral to conciliation, often within a few weeks.
3. Conciliation, usually a single session by phone, video or in person, at which many levy disputes settle.
4. Adjudication if conciliation fails. The adjudicator may decide on the papers or call a hearing, and both sides may file submissions.
5. The order, which is binding. Either side may appeal to the High Court on a question of law only, within the time limit the Act sets.

Expect a matter that goes all the way to adjudication to take several months. Keep paying the undisputed levy throughout.

What a body corporate may not do

It may not disconnect your water or electricity, deny you access to the building, block your remote or clamp your car to force payment of arrear levies. Courts have generally treated that kind of self-help as unlawful, and CSOS can order the supply restored. The proper route for the body corporate is a claim for the arrears, through CSOS or in the magistrates' court. It cannot use the Small Claims Court, because only a natural person may bring a claim there; a body corporate can only be sued in that court.

Equally, you may not withhold levies because the trustees will not fix the pool or repaint the block. Those are separate complaints, and both can go to CSOS.

Owner's rights and body corporate's rights

The owner may: inspect scheme records including the budget, minutes and resolutions; attend and vote at general meetings; be charged only on the correct participation quota or as the rules provide; be told what a special levy is for; dispute a charge at CSOS; be free from disconnection or lockout over arrears.

The body corporate may: raise levies from an approved budget; raise a special levy for a genuine unbudgeted expense; charge interest on arrears at a properly resolved rate; recover arrears and reasonable legal costs; withhold a levy clearance certificate until arrears are settled; apply to CSOS itself for an order against an owner.

Common mistakes and what they cost

Stopping payment. The cost is interest, legal fees added to your account, a possible judgment, and a blocked sale when you need a clearance certificate.

Disputing at the AGM only. A grumble in the meeting is not a dispute. Put it in writing afterwards.

Not checking the quota. Owners sometimes pay on a wrong quota for years because nobody compared the statement to the sectional plan.

Buying without a clean statement. If the seller's arrears were not settled from the proceeds, you inherit the argument. Insist the conveyancer gets a full levy statement before transfer.

For trustees, no paper trail. A special levy with no quotation and no resolution is the easiest order for an adjudicator to set aside.

If you cannot afford an attorney

CSOS was designed for exactly that. The application fee is small, the process is written and conciliation-led, and you can represent yourself. The Small Claims Court handles money claims up to R30 000 without lawyers if you have overpaid and want a refund. Legal Aid South Africa on 0800 110 110 can advise on which route fits.

If you are a trustee

Most levy disputes come from poor communication rather than bad numbers. Circulate the draft budget before the AGM, show the participation quota calculation, explain special levies with a quotation attached, send monthly statements that itemise interest and legal charges, and answer written queries in writing. A scheme that can produce its budget, minutes and resolutions on request rarely loses at CSOS.

Related reading: What are transfer costs when buying a house?, which covers the levy clearance certificate you will need on sale.

LawMatch is not a law firm and this page is general information, not legal advice about your scheme.