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Deceased Estate

By gustav fourie on Thu, 15 Mar 2012 at 15:29

Hi there my mother used to own a unit in a complex, she has passed away and her levies were in arears. We made a arrangement to pay the arears levies and the current which we have done. The amount in arears was very high but we have tried our best to get it all upto date. My question we have not missed one levy payment since the agreement today we get notified that they will switch of our electricity which is paid upto date no arears, because of the arears in levies plus they charge huge amounts of interest. Are they alowed to charge interest on a deceased estate and are they allowed to switch of the electricity.

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RE: Deceased Estate

Julie Steffers replied on Fri, 16 Mar 2012 at 16:33

Please read Paddocks Press April 2011, it will answer your question on the switching off of electricity.

RE: Deceased Estate

Peter Vickery replied on Sun, 18 Mar 2012 at 15:08

Hi Gustav - Bodies Corporate are not bound by the Usury Act and can charge what interest they deem fit. They aren't in the money lending business but are very much a business and require cash flow in order to meet their monthly commitments. Deceased Estates are no different - what happens is that when an owner falls into arrears, the costs are effectively picked up by the other owners, as funds may be diverted from essential maintenance into meeting just the running costs, because of the shortfall. The trustees would also be remiss in their fiduciary duties if they granted you any relief, as it would prejudice the interests of the other owners.

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RE: Deceased Estate

Julie Steffers replied on Tue, 20 Mar 2012 at 19:54

What Peter says is correct. Do go see the trustees and negotiate settlement with them. They may take legal action against you, charge interest but they may not disconnect electricity

RE: Deceased Estate

Annette Stones replied on Wed, 21 Mar 2012 at 00:46

Hi Gustav - What intrigued me about your query was the assumption that, while you've kept up to date with the current levy payments, the arrears have continued to accumulate interest. What actually happens, however, is that levies are credited historically. In other words, any payment made would go towards settling the oldest debt first, with the current levies thus becoming overdue. In your case, the interest charged is at this point therefore most probably for post-death rather than pre-death arrear amounts, with the debt accordingly no longer the deceased's but now the heirs'. It is in this way that the situation in respect of municipal rates and Body Corporate levies - which remain ongoing after death, with these accounts thus remaining active - differs from the situation in respect of e.g. medical or credit card accounts, where the debts are more clearly distinguished as incurred prior to death and claimable only against the deceased's estate.

Yes, even though creditors do not have to be paid until the estate is wound up, they are not prevented from charging interest in the interim on outstanding amounts. If the estate is solvent, it would therefore be advisable to settle all interest-bearing accounts - and, given the particularly high interest rate inflating the debt, in particular the levy account - as soon as possible.

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