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A body corporate has three lawful remedies for unpaid levies: a formal written demand, court proceedings, and dispute resolution through the Community Schemes Ombud Service. Everything else (cutting electricity, denying access, withholding services) is unlawful without a court order, regardless of how much is owed.
Section 3(1)(c) of the Sectional Titles Schemes Management Act 8 of 2011 places a statutory duty on the body corporate to require owners to contribute to its funds. This is not discretionary. Trustees who allow arrears to drift may be in breach of their fiduciary duty to the scheme.
The practical consequence is simpler. Every rand not collected from a defaulting owner is carried by the owners who did pay.
Levies are due on the first of the month. NAMI allows a seven-day grace period, so an account is formally in arrears from the seventh.
The grace period is not a soft deadline, interest and the escalation clock both run from the date the account falls into arrears.
Prescribed Management Rule 21(3)(c) permits a body corporate to charge interest on any overdue amount, provided the rate does not exceed the maximum rate of interest payable per annum under the National Credit Act 34 of 2005, compounded monthly in arrear.
For arrear levies, the applicable NCA category is typically incidental credit agreements, where the maximum is 2% per month. This is why 2% is the rate most South African schemes apply, it reflects the statutory ceiling, not an arbitrary convention. The rate a scheme actually charges must be resolved at a general meeting and recorded in its financial policies.
Legal costs are also recoverable. Under PMR 25(4), an owner is liable for all reasonable legal costs the body corporate incurs in recovery, as taxed or agreed. The scheme funds recovery up front, but the cost properly sits with the defaulting owner.
A defective levy charge is the first defence a defaulting owner will raise. Before any demand goes out, confirm that the levy was properly resolved at a general meeting and notices sent within 14 days (STSMA s25(1)); that the amount matches the owner's registered Participation Quota; and that nothing has been debited that PMR 25(5) does not permit.
A demand built on a bad charge is worse than no demand at all.
Once an account passes the grace period it is flagged and a reminder is issued by email and SMS. If there is no response within seven business days, the owner is contacted directly. Any query about the amount is investigated and resolved within five business days.
A formal written Letter of Demand is issued containing full itemised arrears, accrued interest at the scheme's approved rate, a payment deadline of 10 to 15 business days, and a clear statement that legal action follows. The date of issue, method of delivery, and any response must be documented.
Attorneys receive a full account statement and copies of prior correspondence and issue summons in the appropriate forum. Undefended matters proceed to default judgment. A standing levy collection policy is sufficient authority, each demand does not require its own resolution.
Watch the clock. Levy debts prescribe after three years under the Prescription Act 68 of 1969. Legal action must be initiated before the debt approaches that period or the right to recover it is lost.
Where an owner comes forward wanting to settle, an Acknowledgement of Debt is usually better for the scheme than escalation. An agreed monthly amount goes toward the arrears while the owner also settles each new monthly invoice as it is issued.
While the arrangement is honoured, legal action is halted and no legal fees accrue. If it is breached without communication, the legal process resumes from where it paused.
The distinction that matters is communication. An owner who contacts the scheme about a difficulty can usually be accommodated. An owner who simply stops paying cannot.
Under section 15B(3)(a) of the STSMA, the Registrar of Deeds may not register the transfer of a sectional title unit until the body corporate issues a Levy Clearance Certificate confirming that all arrears have been paid or adequately secured.
A defaulting owner cannot sell their unit and walk away from the debt. The arrears, including interest and recoverable legal costs, are settled at the point of sale.
Regardless of how much is owed, the following are unlawful without a court order. Trustees who authorise them expose the scheme to urgent interdict applications, damages claims, and legal costs that typically exceed the arrears being chased.
Electricity disconnection is the action trustees most often believe they are entitled to take. They are not. Where supply serves a private unit, disconnection engages basic-services protections and municipal by-laws. There is no shortcut that does not create liability for the scheme.
No. Disconnecting or restricting electricity, water, or gas to a unit is unlawful without a court order, no matter how large the arrears. It is the most common mistake trustees make, and it exposes the body corporate to an urgent interdict and a damages claim.
Under PMR 21(3)(c), the rate may not exceed the maximum payable under the National Credit Act, compounded monthly in arrear. For arrear levies the applicable category is typically incidental credit agreements, where the maximum is 2% per month, the rate most schemes apply. The rate must be resolved at a general meeting and recorded in the scheme's financial policies.
Three years. Levy debts prescribe under the Prescription Act 68 of 1969, so legal action must be initiated before the debt reaches that age or the right to recover it falls away.
Not without settling them. Under STSMA section 15B(3)(a), the Registrar of Deeds cannot register a transfer until the body corporate issues a Levy Clearance Certificate confirming arrears are paid or secured.
The defaulting owner. PMR 25(4) makes an owner liable for all reasonable legal costs the body corporate incurs in recovery, as taxed or agreed between the parties.
It is a written agreement where an owner commits to a fixed monthly payment toward arrears while also settling each new monthly invoice. While it is honoured, legal action is halted and no legal fees accrue. If the owner defaults without communication, the legal process resumes from where it paused.
The Magistrate's Court, Regional Division, hears debts up to R400,000. Larger or more complex matters go to the High Court. Undefended matters are usually resolved by default judgment.
| Provision | Relevance |
|---|---|
| STSMA s3(1)(c) | Duty of the body corporate to require levy contributions |
| STSMA s25(1) | Owners must be notified of levy amounts within 14 days of the AGM |
| STSMA s15B(3)(a) | Levy Clearance Certificate required before transfer is registered |
| PMR 21(3)(c) | Interest on overdue amounts, capped by the NCA, compounded monthly |
| PMR 25(4) | Owner liable for reasonable legal costs of recovery, taxed or agreed |
| PMR 25(5) | Prohibition on unauthorised debits to owner accounts |
| Sectional Titles Act 95 of 1986 | Participation Quota registration and calculation |
| Prescription Act 68 of 1969 | Three-year prescription period for levy debts |
| CSOS Act 9 of 2011 | Oversight body and dispute resolution forum |
| NCA 34 of 2005 | Maximum interest rate reference; may apply to instalment arrangements |
This guide describes NAMI Property Management's standard approach to levy collection and general principles under South African sectional title law. It does not constitute legal advice. For scheme-specific matters, consult your body corporate's appointed attorneys.