We manage community schemes both section...

Asked by LeanaG on 27-08-2019 09:27:56
Question posted in the General Law category relating to Western Cape

We manage community schemes - both sectional title as well as Home Owners Associations.  May trustees of a scheme decide to penalise a member who pays his/her levy in cash?  Cash payments result into cash handling fees, for example an amount of R400 cash results into about R14 bank fees.

I cannot imagine that anyone may force a member how to pay levies - if I prefer to pay cash - be that due to personal circumstances - how can the receiver of the levy penalise my method of payment?

Message from the Lawyer

Posted by Att. Patrick on 27-08-2019 14:45:15

Hi there and thank you for your question,

I am a practicing attorney based in South Africa and I will assist you with your question. Please feel free to ask as many follow up questions in order to clarify your question. If you have a new question, you must please open a new thread.

If the HOA / Body Corporate's constitution is silent on the method of payment, then it is up to the member to decide how they want to make the payment of the levies, just like a person is entitled to decide how to pay a third-party service provider. 

On that basis, the trustees of the scheme are NOT simply allowed to penalise a member who pays the levy in cash.

It should be noted that bank charges are considered to be expenses incurred in the production of income (the levies) and accordingly the bank charges are deductible in the hands of the scheme.

If however the HOA / Body Corporate's constitution says that a person needs to pay the levy, free of deduction or bank charges, or if it contains a section dealing with extra bank charges for cheque/cash deposits, then the trustees WILL be entitled to do that... however, it wouldn't be a penalty, rather just a further payment obligation.

Based on this, I think that your trustee is incorrect in his approach and you need to guide him in this regard. Make the suggestion that they vote on an amendment of the constitution to deal with this, or, that everyone's levy is increased by R10 (or whatever) per month so as to account for any bank charges that might arise due to cheque/cash deposits.

I think that the trustee is acting outside of the powers of the HOA, and a member would be successful in any defence of such a claim. 

If there is a part of the answer which you need more advice on, or clarity please continue in this same thread instead of opening a new question.

Att. Patrick

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Answer Accepted

This answer was accepted on 27-08-2019 15:02:21

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