not end with the purchase. An owner is obliged to pay levies according to the size of the unit and owner who has a smaller unit pays lower levies. The levies are calculated in accordance with the budget, which is prepared annually by the trustees or agent.
• You should scrutinise the budget, the financial statements of the body corporate and the minutes of the meetings held by the trustees of the body corporate for the following reasons:
• You have to ensure that all owners are paying the levies on time. If owners fail to pay the levies the scheme soon falls into disrepair, as the body corporate will not be able to pay its creditors or maintain the building and common property. A large amount owing on arrear levies should immediately trigger a warning bell and might be an indication that the scheme is not managed properly.
• The trustees have to insure the buildings and keep them insured at replacement value.
Sectional title schemes are often under insured as the trustees fail to increase the insurance on a regular basis, to keep the levies down. The insurance policy has to specify the insured value of each unit. An owner can increase the insured value but will be liable for the additional premium on that owner’ s unit.
• The trustees must establish a fund which is sufficient for the proper upkeep, repair and maintenance of the building and also provide for future expenses. The trustees can also claim payment of special levies to cover specific needs of the scheme. For example, the owners might have agreed to install a new swimming pool or to upgrade the security system, or it might be that the trustees did not budget properly as a result of which owners can be caught on the back foot and called to contribute an additional amount.
• The special levies become payable by owners once a resolution has been taken by the trustees. You should ensure that you will not suddenly www. reimag. co. za Residential Handbook 2016 / 17
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