Practical steps for collecting arrear levies in community schemes

Arrear levies, unpaid monthly contributions from owners, are one of the most serious threats to the financial health of any residential estate, complex, or block of flats in South Africa.

When owners don’t pay their levies, the body corporate or home owners association (HOA) cannot fund essential services, maintain common property, or preserve property values. Left unchecked, levy arrears can spiral into:

• Financial instability for the scheme,
• Deteriorating facilities,
• Overdue municipal accounts, and even
• Service disconnections.

The good news is that with a clear, structured strategy and the right financial tools, your scheme can address arrears effectively and lawfully.

Below are the key steps every community scheme should take.

They say prevention is better than cure, and this couldn’t be truer when it comes to levies. Community scheme living is one of the fastest-growing lifestyle choices in South Africa. It offers security, convenience, and shared living, but with those benefits comes responsibility. One of the most important is paying levies.

For some owners, levies feel like just another bill, often seen as less urgent than the bond repayment or other debts. Some even believe non-payment is “victimless.” But in reality, levies are the lifeblood of every community scheme. Without them, everyone loses.

Here’s why levies matter:

• They fund essential services like security, cleaning, refuse removal, lighting, insurance, and repairs.
• They protect property values by keeping common areas well-maintained.
• They are a legal obligation under the Sectional Titles Schemes Management Act (STSMA).

Annual budgets assume that all owners will pay their share. When some don’t, the shortfall is carried by others, often through levy increases, special levies, or delayed maintenance.

In the end, both paying and non-paying owners are worse off when levies aren’t collected in full.

A fair levy system starts with a fair budget. Trustees must prepare a comprehensive budget that balances:

• Short-term needs (day-to-day running costs), and
• Long-term requirements (major maintenance and upgrades).

A good budget should:

• Cover operational expenses like security, insurance, cleaning, utilities, and wages.
• Provide for long-term upkeep through contributions to the reserve fund.
• Be transparent, so owners can see where their money goes.
• Be realistic, avoiding both under-budgeting (leading to shortfalls and special levies) and over-budgeting (placing unnecessary strain on owners).

When owners see that levies are allocated responsibly and transparently, they are far more likely to support the budget and pay consistently. A well-prepared budget isn’t just numbers on a page; it’s the foundation of financial stability and trust in the scheme.

Even the best budget won’t work if owners aren’t kept informed. Trustees must actively communicate:

• What levies cover,
• How the budget was prepared, and
• When and how payments are due.

Clear communication removes confusion, builds trust, and helps owners see levies as an investment in their own property value.

But communication must be matched with firm enforcement:

• Set clear deadlines.
• Follow up immediately on late payments.
• Apply interest or penalties (within legal limits).
• Escalate to recovery procedures when necessary.

This balance of transparency and firmness encourages voluntary compliance while ensuring fairness for paying members.

Despite the best efforts, some owners will still fall into arrears. To safeguard the scheme, trustees must implement a clear arrear levy management policy that ensures consistency, fairness, and legal compliance.

A strong policy should include:

1. Clear enforcement steps and timelines

Begin with friendly reminders for short-term oversights.

• Escalate quickly to official notices, final demands, and legal recovery.
• Act immediately, delay makes recovery harder and more expensive.

2. Legal safeguards

Schemes can rely on powerful legal tools such as:

• Transfer embargoes (no property transfer without full settlement),
• Lawful interest charges on overdue accounts, and
• Recovery of reasonable legal costs from defaulting owners.

3. Proper documentation

Good recordkeeping is essential for recovery through CSOS or courts. Trustees must keep:

• Resolutions authorising levies and interest charges,
• AGM notices and minutes,
• Levy statements and demand letters, and
• Proof of delivery of notices.

4. Lawful enforcement

Trustees may not disconnect services, block access to units, or shame owners. Only lawful processes will hold up before CSOS or in court.

5. Communication and compassion

Firmness should be balanced with empathy. Early engagement may allow for realistic repayment plans, avoiding costly legal battles and preserving relationships.

6. Ongoing monitoring

Trustees should review arrears monthly, flag overdue accounts early, and apply the policy consistently.

Even with the best arrear levy policy, collections take time. Meanwhile, the scheme must continue to function, paying suppliers, maintaining facilities, and covering municipal accounts.

That’s where STS’s arrear levy funding solution comes in. It allows your scheme to operate as if every owner were paying on time by providing:

• Funding for up to 100% of arrear levies,
• No sign-up or initiation fees,
• Control of your own collections, with trustees managing the recovery process,
• Flexible repayment, linked to actual arrears recovered, and
• A simple application process with minimal admin.

This solution protects cash flow, prevents the need for emergency special levies, and gives trustees breathing room to focus on long-term sustainability.

Arrear levies are more than an inconvenience; they threaten the very stability of a community scheme. The key to tackling them lies in early action, a fair and transparent budget, clear communication, lawful enforcement, and smart financial management.

By combining a strong arrears policy with innovative funding support, trustees can protect the financial health of their scheme, safeguard property values, and maintain the quality of life for all residents.

If arrear levies are creating financial strain in your community scheme, contact STS today to explore how our funding and legal support can help your estate, complex, or block of flats regain control and thrive.