Levy Collections – Legal Framework, Remedies and Effective Enforcement
When arrears persist, trustees and directors must move beyond reminders and AODs to formal enforcement. This article sets out the core legal pathways – court and CSOS – how they differ, how to use them effectively, and how to handle legal fees, privacy, tenants, deceased estates and utilities lawfully.
Court Route: From Summons to Execution
Summons
- Drafted per court rules and issued with a case number.
- Service by Sheriff:
- Sectional Title: service at the unit (domicilium) is valid.
- HOA: check the MOI—personal service may be required if domicilium is not the stand.
Defence and Summary Judgment
- Owner has 10 days to defend.
- Levy claims are typically documentary (law + invoices). Defences often fail.
- Summary judgment is common where a defence lacks legal merit.
Default Judgment
- If no defence is filed, default judgment is sought from the clerk/magistrate.
Credit Bureau Listing
- Court judgments are automatically listed—more difficult to remove than a simple default listing.
Warrant of Execution (Movables First)
- Sheriff attaches movables (furniture, electronics). Vehicles only if clear title.
- Goods are auctioned; proceeds pay sheriff’s costs first, then the scheme.
If Unit Is Tenanted
- Sheriff cannot attach tenant’s property.
- If a valid lease is produced, apply under Section 72 to attach rental so the tenant pays the scheme until the debt is cleared.
Sale in Execution of the Unit (Section 66)
- Applied for after reasonable steps on movables.
- Court now requires fair market value; bank (bondholder) is usually the secured creditor and is paid first.
- Levy embargo: transfer cannot proceed without levy clearance—gives the scheme leverage to be paid/provided for on transfer.
CSOS Route: Low Cost, Slow Enforcement
Filing & Conciliation
- Application is lodged; parties are invited to conciliation to attempt settlement.
Adjudication
- Submissions are filed; adjudicator issues an order.
- Orders are not credit-listed. If ignored, the scheme must obtain an enforcement order and then still use the sheriff/courts (same as the legal route).
- Chronic backlogs and administrative delays are common.
Legal Fees and Regulation 25 (Sectional Title)
- The scheme pays attorneys as the matter proceeds—like any civil action.
- Regulation 25: no amounts may appear on an owner’s levy statement without consent or a court order.
- Practical approach:
- First prize: include legal fees in an AOD (owner agrees).
- If refused, taxation/costs order at court—recovery is typically less than actual spend.
- Some bodies corporate adopt a trustee resolution to reflect legal fees on statements pending taxation; if disputed, remove and tax.
- HOAs are not bound by Regulation 25, but contested fees can still be tested by the court.
Additional Remedies and Guardrails
- Sequestration: Possible after an act of insolvency (e.g., sheriff finds no assets). High Court, costly, case-specific.
- Utility Disconnections: Court order required; never self-help. No loading of levy debt onto prepaid meters (spoliation risk).
- Prepaid Meter Installation: With a properly worded resolution/order, can be installed to prevent further communal loss (lawfully and transparently).
- POPIA & Privacy: Share totals and number of arrear accounts, not names/unit numbers—protects debtor privacy and avoids complaints.
- Late Estates: Sue the executor once appointed; same process applies.
- Acceleration Resolution: If a single instalment is missed, the full year’s levies fall due—improves legal efficacy and cash-flow certainty.
- Levy Funding Products: Short-term cash relief but long-term complexity and cost; proceed with caution and legal advice.
Choosing the Right Path (Practical Guidance)
- Cash-flow urgency and deterrence needed? Go court.
- Owner engagement likely and costs must be contained? Consider CSOS, but plan for delays and eventual court enforcement.
- Tenant in occupation? Prioritise Section 72 rental attachment (if lease is valid and term remaining).
- Multiple small claims? Use acceleration to consolidate and improve outcomes.
Fair, firm, and lawful enforcement protects all owners who do pay. A clear policy, proper resolutions, and disciplined use of the legal toolkit—summons, judgment, execution, and targeted alternatives—deliver robust results while respecting due process, privacy and affordability realities. Pair enforcement with proactive communication and sensible AODs, and arrears fall faster with fewer disputes.