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Increase in levies between AGM's

By Lammert Stavast on Thu, 13 Dec 2018 at 08:32

Good morning

If the actual costs differ from what was quoted / budgeted and approved at AGM for example the security or gardening levies. Could the trustees increase the levies to be inline with the actual amounts without having to convene an AGM?

Kind regards

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RE: Increase in levies between AGM's

Murray Bennett replied on Thu, 13 Dec 2018 at 22:38

The trustees may only increase the levies by up to a maximum of 10% in the beginning of the financial year, they can then propose a further increase at the AGM.

In terms of section 3(3) of the Act and prescribed management rule (PMR) 21(3)(a) the trustees may from time to time raise special contributions for expenses which are necessary but were not budgeted for in the estimated expenditure approved at the last AGM. Trustees do not have the power to raise a special contribution when a budgeted expense exceeds the approved estimate. They can only raise a special contribution for unexpected expenses which were not included in the budget. Link to full article by Paddocks: https://www.paddocks.co.za/paddocks-press-newsletter/jennifer-paddock-levies-what-you-need-to-know/

RE: Increase in levies between AGM's

Lammert Stavast replied on Fri, 14 Dec 2018 at 08:57

Thank you for the feedback. Would the change of security company constitute the need to raise a special levy as it could not be foreseen that the current security contract would be cancelled and a new and more expensive contract would be entered into?

RE: RE: Increase in levies between AGM's

Graham Paddock replied on Sat, 15 Dec 2018 at 22:00

In terms of PMR 21(3) the trustees' right to raise a special resolution is limited to situations in which "additional income is required to meet a necessary expense that cannot reasonably be delayed until provided for in the budget for the next financial year".

The fundamental principle is that trustees should only increase the contribution burden on owners when this is really necessary. In any other circumstances, it is the owners who decide on the amount of contributions....Show More

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RE: RE: RE: Increase in levies between AGM's

Lammert Stavast replied on Wed, 19 Dec 2018 at 05:42

There was a breach of contract terms and gross negligence by the security firm. The body corporate could not continue using there services, knowing the short comings and negligence. I would therefor think that the body corporate could not continue until next year without neglecting there responsibility to safeguard the body corporate.

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