Arrear levy solutions with people in mind

Friendly group of business people

Share this post

Category: Funding and Treasury

Arrear levy solutions with people in mind

Are arrear levies threatening your community scheme’s financial stability?

The non-payment of levies potentially has severe consequences for community schemes. Body corporates are unable to fund the day-to-day expenses and necessary maintenance and repair projects.

In many cases, levy shortfalls negatively impact all unit owners. Levy debt often results in the choice between paying unit owners having to subsidise the arrear levy amounts via special levies to cover the bills, or the scheme having to delay repairs and maintenance. The situation becomes even more severe if remedial action is not taken soon; all unit owners’ property values are affected by building decay and/or services are cut. Last year, several municipalities disconnected services to properties, including community schemes.

In partnership with BC Funding Solutions, we offer community schemes with levy debtor problems Arrear Levy Funding. This solution allows the community scheme to operate effectively on a fully funded basis as if all unit owners were paying their levies.

We often get the question, “does Sectional Title Solutions purchase the arrear levies from the community scheme”.

Regional Sales Manager for Pretoria, Schalk Liebenberg, answers the question:

Video transcript:

“The simple answer is no, the Arrear Levy Funding offered by Sectional Title Solutions is in the form of a loan advanced to the community scheme, and is not a transaction involving the purchase of levies, factoring or discounting of levies.

 Section 4(f) of the Sectional Title Schemes Management Act deals with the community scheme’s power to enter into such a loan agreement and to borrow funds. When the community scheme enters into the arrear levy finance agreement, the arrear levies of the community scheme are not purchased by STS, but are ceded to STS by way of a security session.

 There is however a scenario where arrear levies can be sold to an external third party. This will require a majority resolution by the members at a duly constituted meeting and cannot be sold for less than the face value without a unanimous resolution being taken by the members.

 The discounting of levies would in our opinion severely prejudice the paying unit owners and could be perceived as to be negligent management of the financial affairs of the community scheme, if ever challenged by unit owners.

 With the Arrear Levy Finance Solutions from STS, a community scheme is able to finance hundred percent of its arrear levies.”

With our Arrear Levy Funding solution, everybody wins!

 Our solution allows for body corporates to offer struggling unit owners debt rehabilitation opportunities, while ensuring that the paying owners are not penalised by subsidising budget shortfalls. Community schemes have immediate and ongoing access to the funds required to secure cash flow and ensure operational efficiency. There are no sign-up or initiation fees.

Interest is added to arrear levy accounts, meaning paying unit owners are not prejudiced by the costs of the funding and repayment only occurs when arrears are collected. The community scheme retains full control of levy collections, protecting the property investment of all unit owners and avoiding excessive legal fees.

Contact us to help your community scheme thrive again.

Schalk Liebenberg


Regional Sales Manager: Pretoria