Blacklisting in bodies corporate: The why, how and how long – Nicole Nel

TVDM Consultants

When there are multiple owners who are in arrears with their levy contributions, this can not only cause an incredible drain on body corporate resources, as they often have to engage the services of legal practitioners, but also seriously slow down the operation and management of the scheme, as there is now a shortfall on the overall income budgeted for that financial year, there will not be enough funds available to meet all of the immediate needs of the body corporate.

The two most popular methods for bodies corporate to use in the event that an owner is in arrears with their levy contributions, are to recover these arrear amounts either through the Community Schemes Ombud Service (CSOS) or the Civil Court route. The CSOS, although it provides rather promising results, is in our experience, unfortunately a rather lengthy process, and with the Civil Court incredibly high expenses can be expected.

The above therefore often leaves bodies corporate between a rock and a hard place with regard to the recovery of arrear levy contributions. But what if there was another way?

An often unused method that can be used to encourage owners not to fall behind on their levy contributions is the use of blacklisting on credit bureau services, such as TPN or TransUnion.

What is blacklisting? In South African terms, blacklisting is every time a consumer is refused an interest-bearing loan, or credit due to having a negative reputation with creditors who use credit bureau services.

In terms of the National Credit Act 34 of 2005, this is known as default blacklisting.

As soon as a member of the body corporate is in arrears with their levy contributions, a letter of demand must be sent to them demanding payment of the arrear amounts within twenty days. Should the owner fail to repay the amount owing for a period of three consecutive months after the letter of demand was sent, they are eligible to be blacklisted by a credit bureau service.

A reason why the arrears should be loaded to the arrear owner’s credit profile will be required by the credit bureau service. It is therefore of the utmost importance that, before making an application to have an owner in arrears blacklisted, bodies corporate have a sound legal reason for doing so. Should there be any uncertainty in this regard, it is always better to reach out directly to credit bureau services and speak to their data department in order to obtain this information.

Once the application to have an owner in arrears blacklisted is approved, the period for which the owner remains blacklisted will be twelve months.

​​Perhaps with this knowledge in mind, owners will think twice before falling in arrears with their contributions. Please contact us at TVDM Consultants on info@tvdmconsultants.com or 061 536 3138 if you would like more information on your obligation as a member and duty as a trustee.

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