When purchasing a property in a new development, understanding levy payments can be a complex and confusing process. Who is responsible for paying levies before the units are registered? What are the implications for owners and developers? This article aims to clarify the process and provide guidance on levy payments in new developments.

Pre-Registration Period: Developer’s Responsibility

Prior to registration, the units belong to the developer, making them liable for any levies due to the managing agent (Sectional Titles Act 95 of 1986, Section 3(1)). During this period, the developer is responsible for paying levies, rates, and taxes. This includes provisional levies, which are typically calculated based on the estimated monthly levy.

Post-Registration: Owner’s Responsibility

Once the development is registered with the Deeds Office and transferred to the owners, the Body Corporate or Homeowners’ Association (HOA) takes over the responsibility for managing and collecting levies (Sectional Titles Schemes Management Act 8 of 2011, Section 10). Owners become liable for paying levies, as determined by the Body Corporate or HOA.

Key Implications

• Developers are liable for levy payments until registration.
• Owners are liable for levy payments after registration.
• Provisional levies may be charged by the developer during the pre-registration period.
• The Body Corporate or HOA manages and collects levies post-registration.

Supporting Legislation

• Sectional Titles Act 95 of 1986 (STA)
• Sectional Titles Schemes Management Act 8 of 2011 (STSMA)
• Community Schemes Ombud Service Act 9 of 2011 (CSOSA)

Best Practices

• Developers should disclose levy payment terms and conditions to owners.
• Owners should understand levy payment structures and liability.
• Managing agents should ensure transparent communication regarding levy payments.

Conclusion

Understanding levy payments in new developments is crucial for both owners and developers. By recognizing the responsibilities and implications, parties can navigate the process with clarity. Remember, developers are liable for levy payments pre-registration, while owners take over post-registration.

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