“The body corporate at our complex doubled our levies last month and only sent out a general notice to all the owners informing us that the increase was because the body corporate had to comply with Covid-19 regulations and install sanitizers, get protective gear for cleaners etc. I understand this costs money and must comply, but surely we should have been consulted before the levies were just increased?”
To unpack the answer, we must look at the provisions of the Sectional Titles Schemes Management Act 8 of 2011 (“STSMA”). Section 2(1) determines that a body corporate consists of all the owners of units in a sectional title scheme and are collectively referred to as the members of the body corporate. Section 11(2)(a) and (b) of the STSMA further stipulates that the members may make rules which establish how levy contributions by owners can be increased by special resolution, provided that where an owner is adversely affected, the rules can only be modified by special resolution with the prior written consent of the owner.
Section 1 of the STSMA defines a special resolution as a resolution passed by a minimum of 75% of the votes of the members, both in value of the votes (as determined by the participation quota of each owner) and in number. This would need to be met in order to pass a special resolution which could increase levies. If this is not met, then the decision by the body corporate to increase levies would not be valid.
Assuming, that the requirements for a special resolution are met, then it still stands to be considered whether an owner is adversely affected, and if so if his consent was obtained. As the term “adversely affected” is not specifically defined, our courts have had to provide guidance. Our courts have held that, among other things, regard should be given to the percentage increase. For example, a 100% increase could be seen as adverse, however, the duration of the increase should also be considered. If the increase is not of a permanent nature, it may not qualify as “adversely affecting” the owner. In general, if an increase unfavorably changes the liability of the owner to make levy contributions, then it could be held to hold an adverse effect for the owner and the consent of the owner would be needed.
Therefore, if a special resolution was validly passed by the body corporate, but the levy increase is permanent in nature, then there could be a strong argument that you have been adversely affected and it would have required your prior written consent for the increase of the levy to be valid.
It would thus be advisable to inquire from your body corporate regarding the nature of the special resolution passed and the extent and intended timeframe of the proposed levy increase in order to enable you to assess whether the levy increase was validly passed and allow you to raise a grievance should you feel it necessary.
Additionally, is should be noted that the STSMA states that the trustees of the sectional title scheme can by resolution levy a special contribution from owners if the body corporate is required to comply with a notice or order issued by a competent authority requiring work in respect of any land or building in the sectional title scheme. Covid-19 regulations could potentially fall under the auspices of such a special contribution and it may therefore be worthwhile to make sure that the levy increase was not rather a special contribution levied on owners. Again, more information from the body corporate will assist in helping you understand the validity of the levy increase.