{"id":370,"date":"2018-07-30T08:14:39","date_gmt":"2018-07-30T08:14:39","guid":{"rendered":"https:\/\/dotnewsconnect.co.za\/law\/?p=370"},"modified":"2018-08-28T12:36:05","modified_gmt":"2018-08-28T12:36:05","slug":"your-body-corporate-and-arrear-levies-to-sequestrate-or-not-to-sequestrate","status":"publish","type":"post","link":"https:\/\/dotnewsconnect.co.za\/law\/2018\/your-body-corporate-and-arrear-levies-to-sequestrate-or-not-to-sequestrate\/","title":{"rendered":"Your Body Corporate and Arrear Levies: To Sequestrate or Not To Sequestrate?"},"content":{"rendered":"<blockquote><p><strong><em>\u201c\u2026aye, there\u2019s the rub\u201d (Shakespeare)<\/em><\/strong><\/p><\/blockquote>\n<p>Levies are the lifeblood of a sectional title scheme, and the Body Corporate has a duty to recover arrears from defaulting owners. It has the power, in addition to following standard debt collection procedures and perhaps approaching the Community Schemes Ombud for assistance, to apply for the sequestration of the owner\u2019s estate. Indeed just the threat of a sequestration application is sometimes enough to frighten a recalcitrant debtor into paying up.<\/p>\n<p>But, as Shakespeare might have put it, there\u2019s an alarming \u201crub\u201d here that body corporate trustees ignore at their peril. It arises from \u2018the danger of contribution\u2019 in insolvent estates. In a nutshell, where the \u2018costs of sequestration\u2019 exceed the funds in the estate available to pay them, proved creditors may well have to contribute towards those costs in addition to losing their claims. Talk about adding insult to injury!<\/p>\n<p>&nbsp;<\/p>\n<h6>A R46k shortfall \u2013 must the body corporate contribute?<\/h6>\n<ul>\n<li>A body corporate successfully applied for the sequestration of the personal estate of a defaulting section owner.<\/li>\n<li>The property was bonded to two banks who duly proved their claims against the insolvent estate. Wisely, no other creditors proved claims and the trustee of the insolvent estate drew an account providing for the two banks alone to pay pro-rata contributions to cover the R46,663-16 shortfall in the costs of sequestration.<\/li>\n<li>The banks objected to the account on the basis that the body corporate should also contribute as \u2018petitioning creditor\u2019, although it hadn\u2019t formally proved a claim. The Master of the High Court ruled that the body corporate was protected from contributing as its claim related to arrear levies (and the costs of recovering the arrears) \u2013 claims which didn\u2019t need to be formally proved and would by law be paid out of the proceeds of the property anyway.<\/li>\n<li>The banks asked the High Court to set aside the Master\u2019s ruling, and the Court duly held that as \u201cpetitioning creditor\u201d the body corporate must indeed contribute to the shortfall pro-rata with the bondholders.<\/li>\n<\/ul>\n<p>The bottom line &#8211;\u00a0<strong>trustees of bodies corporate should, before applying for a defaulting owner\u2019s sequestration, make certain that there is no danger of contribution.\u00a0<\/strong><br \/>\n&nbsp;<\/p>\n<p style='font-size:12px'><strong>Disclaimer:<\/strong> The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.<\/p>\n<p style='font-size: 12px;color: #ccc;text-align: right'>\u00a9 LawDotNews<\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u201c\u2026aye, there\u2019s the rub\u201d (Shakespeare) Levies are the lifeblood of a sectional title scheme, and the Body Corporate has a duty to recover arrears from defaulting owners. It has the power, in addition to following standard debt collection procedures and perhaps approaching the Community Schemes Ombud for assistance, to apply for the sequestration of the [&hellip;]<\/p>\n","protected":false},"author":101014,"featured_media":373,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[23,24,13,6],"tags":[],"class_list":["post-370","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-debt-recovery","category-insolvency-liquidation-business-rescue","category-litigation","category-property"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Your Body Corporate and Arrear Levies: To Sequestrate or Not To Sequestrate? &#8226; LawDotNews<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/dotnewsconnect.co.za\/law\/2018\/your-body-corporate-and-arrear-levies-to-sequestrate-or-not-to-sequestrate\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Your Body Corporate and Arrear Levies: To Sequestrate or Not To Sequestrate? &#8226; LawDotNews\" \/>\n<meta property=\"og:description\" content=\"\u201c\u2026aye, there\u2019s the rub\u201d (Shakespeare) Levies are the lifeblood of a sectional title scheme, and the Body Corporate has a duty to recover arrears from defaulting owners. 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