“But I didn’t agree to that!” – When can trustees implement special levies?
Following the attention the concept of special levies has enjoyed in the media over the past few weeks, the question on every sectional title unit owner’s lips seems to be: “If I did not agree to a special levy being raised, how can the body corporate possibly add this additional amount to my levy statement?” The question often goes hand-in-hand with a strong opinion that such contributions cannot possibly be legally due and payable.
This opinion seems to be reinforced by some owners’ opinion that trustees no longer have the authority to raise special levies at all, due to the fact that the cost of maintenance and repairs should be provided for in the scheme’s ten year maintenance, repair and replacement plan and should be included in the scheme’s reserve fund budget.
While it is true that special levies should not be raised to pay for routine maintenance expenses such as the painting of the building, special levies are still very much a part of our law. The trustees still have the power to raise special contributions from members in certain circumstances, but these circumstances are limited.
In order for a board of trustees to legally implement a special contribution, the following criteria has to be met:
- The trustees need to pass a written trustee resolution to raise such contributions
- The special contributions have to be required to meet an expense that is necessary
- The special contributions have to be required to meet an expense that is urgent
A classic example of a case where special contributions can and should be raised, is when a storm damages a part of the common property roof, and as a result of the damaged roof, the sections beneath it suffer water damage. If the trustees take action without delay, the damage will be limited, saving the body corporate costs in the long run, while a postponement of the repair works until after the budget for the next financial year has been approved at the next AGM will mean that the body corporate will have to pay both the repair costs and the section owners’ (now much bigger) claim for damages.
If the trustees pass a written trustee resolution to levy members with a special contribution to cover unbudgeted expenditure that is necessary and cannot reasonably be delayed until provided for in the following financial year’s budget, the trustees do not need to consult with the owners. The levy will be legally due and payable despite a lack of consent by any or all members. However, if the trustees implement a special levy without meeting this criteria, the owners can approach the Community Schemes Ombud Service for relief.
Written by Ané de Klerk, Specialist Community Scheme Attorney at Paddocks
This article is published under the Creative Commons Attribution license