IEASA National - News

Body Corporates face clampdown   Article Date :17 Jan 2006 A new protection mechanism has recently come into effect that has far-reaching consequences for sectional title owners. A new protection mechanism has recently come into effect that has far-reaching consequences for sectional title owners. The Act offers protection with regard to poor debt management by the body corporate to sectional title owners who are members of the unit's body corporate. By Philip de Bruin A new protection mechanism has recently come into effect that has far-reaching consequences for sectional title owners. The Act offers protection with regard to poor debt management by the body corporate to sectional title owners who are members of the unit's body corporate. Previously, sectional titles owners were often held liable for the body corporate's debt, which liability could have included loss of their sectional title unit. It was possible in terms of Section 47 of the Sectional Titles Act to hold members of the body corporate personally liable for body corporate bad debt. Creditors were in a position to make an application to the court that every individual member of the body corporate be added to a previously obtained ruling against the body corporate with regard to debt, in cases where the body corporate had failed to comply with the ruling. In such cases, creditors were empowered to claim their money from each body corporate member on a pro rata basis, regardless of whether those members were personally up to date with their payments. According to Mr Don Curtis, candidate attorney for the firm Hofmeyr, writing in the firm's newsletter Property Law News, this law has now been modified to prevent body corporate members whose payments were fully up to date at the time when the initial ruling for debt was made, from being added to the effect of the ruling. "In future, it is possibly only to add as co-debtors those members of the body corporate whose levies, with regard to the relevant debt, were in arrears at the date when the creditor had obtained the ruling against the body corporate. "This situation is far more tenable because in all fairness it protects those sectional title owners whose payments are always up to date. This should discourage unscrupulous developers and managing agents from adding debt to the sectional title willy-nilly when they know full well that the unit would be unable to pay, in a bid to first obtain a ruling against the body corporate and later add innocent members to the ruling in a plot to recover individual members' sectional title units." - Philip de Bruin CLICK HERE TO RETURN TO THE MAIN NEWS PAGE