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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