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Levy increase allowed?

By Celeste Mohamed on Tue, 06 Nov 2018 at 12:09

Good day,

Please may you advise on whether a body corporate can just increase the levy? We were advised on 18 October that our next statement for payment 1 November will include a 10% levy increase as decided by the trustees.

The letter stated :
"In terms of The Sectional Title Act as amended, Section 37(1) a) read with subsection (1) d). It
makes it a legal requirement that the trustees approve a budget and implement the levy based
on the budget with effect from the start of the Body Corporate financial year. Your trustees are
therefore acting in accordance with this requirement of the Act."

From what I read, this section has been repealed in the last amendment?

I will appreciate your help!

Thank you

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RE: Levy increase allowed?

Murray Bennett replied on Tue, 06 Nov 2018 at 19:16

Sectional Title Scheme Management Act - Regulations [full copy can be found under the Library section on this page]
PART 5 FINANCIAL MANAGEMENT
21. Financial year, functions and powers
(3) The body corporate may, on the authority of a written trustee
resolution—
(b) increase the contributions due by the members by a maximum of 10 per cent at the end of a financial year to take account of the anticipated increased liabilities of the body corporate, which increase will remain effective until members receive notice of the contributions due by them for the next financial year; provided that the trustees must give members notice of such increased contributions by notice in terms of rule 25, with such changes as are required by the context;

RE: Levy increase allowed?

Celeste Mohamed replied on Wed, 07 Nov 2018 at 10:47

Hi,

Thank you for the reply. This means that one, they refer to the incorrect section and 2 it can only be done if there is context behind the increase or for something specific? Is it a temporary increase? It seems like it is just an increase?

RE: RE: Levy increase allowed?

Murray Bennett replied on Thu, 08 Nov 2018 at 19:39

The AGM is often held months after the end of the financial year despite the fact that it is supposed to be within 4 months of the financial year end. If the trustees anticipate that there will be any levy increase necessary it makes sense for them to increase the levy by 10% with effect from the year end. As the budget is for the financial year 10% needed right away could equate to quite a few percent more by the time the AGM is held. When the AGM is held the members then approve the budget which could be for less or more than the temporary increase of 10%. Insurance, managing agents fees, repairs, etc all increase every year so a 10% straight increase away is prudent.

RE: Levy increase allowed?

Celeste Mohamed replied on Thu, 08 Nov 2018 at 20:23

Thanks so much

Our AGM will probably take place March or April only. ...Show More

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