Real Estate Investor Magazine South Africa July 2015 | Page 31

MANAGING

Problematic

Sectional Title Schemes
Why everybody must work together to solve
problematic sectional title schemes

BY MANDI HANEKOM

I

t is often thought that when the trustees of a
sectional title scheme decide to take on the services
of a levy finance management company, that the
managing agents are then ‘pushed aside’ but in many
cases, having the three separate entities sorting out
the relative problems in the scheme works well as each
party can concentrate on the jobs that they do well and
are important to fix.
Len Sack of Property Management Services in
KwaZulu-Natal, says “the combination that works
well is one where the levy collections are given to a
company that is dedicated to doing that, to ensure that
the income stream is steady and that those who do not
pay are dealt with accordingly.”
“This leaves the managing agent to do his job, which
is to ensure that the day to day running of the scheme
is done efficiently and properly,” he adds.

“Collecting levies in a sectional
title scheme is often problematic.”
“Collecting levies in a sectional title scheme is often
problematic, in that many do not pay on time and some
do not pay at all. If the trustees have to try and collect
levies on their own it often leads to friction within the
scheme as a neighbour and possible friend becomes
the debt collector. Having managing agents to do this
sort of work is preferable to the trustees doing this
themselves, as a detached view on the matter is needed
www.reimag.co.za

and managing agents are there to ensure the efficient
running of the scheme, and not to get personally
involved.”
However, if there are many who are not paying their
levies, the managing agent sometimes has to call in the
services of a levy finance management company to sort
out the problems with collections and the finances of
the scheme.
Of the problems encountered in bringing in money
for the scheme, one of the biggest problems is that it
is often a very slow process to attach units in the case
of an owner not paying his levies. This leads to a loss
in income that needs to be covered by the others in the
scheme, while they await the sale of the unit. Another
major problem encountered is where funds have been
misappropriated, leaving the scheme in dire financial
difficulties.
Using the various options available, such as levy
guarantees, arrear funding, a project loan or an overdraft
facility, helps the managing agent immensely in getting
the scheme back on its feet and making sure that the
maintenance and repairs needed is caught up and kept
up to date. In this way, scheme maintains its financial
stability and its property value.
Having each entity focus on the job they are assigned
to and not having to deviate to other tasks, ensures that
the whole system of running a sectional title scheme is
efficient and beneficial to all.

RESOURCES
Propell Property Management Services
JULY 2015 SA Real Estate Investor

29