Many South Africans are excited to purchase their first property but are unaware of the complex requirements the law places on both buyers and sellers of such property. Some individuals prefer to buy a freestanding structure with the option to expand the floor plan of their investment. Others opt to buy property in complexes which come with additional requirements set in place by both the law as well as the Body Corporate which is responsible for the management of such complexes. This article will aim to address Body Corporates and their powers to withhold clearance certificates.
When a property is sold and the transfer thereof from the seller to the buyer is sought to be facilitated, one of the first requirements is for a rates clearance certificate to be issued. This certifies that all rates due to the Municipality has been settled and that the buyer of the property may begin his/her ownership thereof without being indebted to the Municipality. However, on top of this is an instrument known as a levy clearance certificate. Where a property forms part of a complex and is regulated by a Body Corporate, the Sectional Titles Act 95 of 1986, bears reference. This Act regulates the manner in which, a Body Corporate may act and regulate the activities of the members who hold Deeds to a Sectional Title.
Where there is a sale of a sectional title, on top of the requirement of a rates clearance certificate, there is an additional requirement for a levy clearance certificate. Owners of a sectional title are aware that as a consequence of such ownership, they are required to pay monthly fees or levies to the Body Corporate for the maintenance of the complex and any additional facilities provided to them as a result of their ownership of a Sectional Title. This levy acts as a sort of “rates” for being a member of the complex and the additional benefits they are able to enjoy as a result of such membership. The levy is a non-negotiable aspect of ownership of Sectional Titles and it is disclosed to potential buyers prior to the purchase.
In the instance where a Sectional Title owner wishes to sell such property, a levy clearance certificate must be obtained from the Body Corporate. Should the owner of the Sectional Title fall behind in such fees the Body Corporate may elect to withhold the Levy Clearance certificate required for the transfer of the property to proceed. However, in terms of section 15B(3)(a)(i)(aa) of the Sectional Titles Act 95 of 1986, a levy clearance certificate may only be withheld in respect of unpaid fees. Body Corporates withholding a levy clearance certificate for alternate purposes may at present not do so.
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