In order for a Sectional Title Scheme to be successful, the scheme (including all the assets therein) is well-maintained and properly administered. In terms of Sectional Title legislation and in order to ensure the financial success of the scheme, levies are payable to the Body Corporate by all members.
When members default on their levy contributions, whether by choice or as a result of a negative impact on their financial circumstances, the income and therefore cash flow of the scheme will suffer accordingly. This may lead to the scheme defaulting on some accounts and falling behind on payments due to lack of funds. Services may be interrupted and maintenance plans may fall apart which can ultimately lead to deterioration of the property and depreciation of values. Through the deliberate or unfortunate circumstances of some members, all members will suffer.
In 2010, a group of Sectional Title experts developed and launched the Stilus Levy Guarantee Insurance Policy. This insurance policy does just what its title suggests: it guarantees the payment of levies to the Body Corporate so that the scheme’s income and members’ interest are protected.
The concept is simple: Stilus takes on the financial responsibility of unpaid levies. In terms of the Stilus policy, when a member defaults on their levy payment, they step in and pays the outstanding levy to the Body Corporate. Stilus will then proceed with the recovery of the outstanding levies direct from the defaulting member. All recovery costs, including interest and legal fees, are recovered as part of the debt. The burden of debt collection and related costs is lifted off of the shoulders of the Body Corporate.
In terms of the policy, Stilus will not reclaim levies paid to the Body Corporate, should they be unsuccessful in their recovery from the defaulting member(s). The Stilus policy now also makes allowance for the inclusion of historic (pre-existing) levy debt into the policy.
All too often we see Bodies Corporate that are financially crippled by a few members who default on their levies. Stilus is the solution for those members looking to protect their investment, despite the financial damage being caused by a few defaulting owners.
Author: Bruce Gibson, Addsure
Contact Addsure – The Leaders in Sectional Title Insurance – to get fit and proper advice from advisors who understand Sectional Title. Contact us in Johannesburg (011) 704-3858; Durban (031) 459-1795; Cape Town (021) 551-5069