Special Levy Liability: For The Seller Or Purchaser?
Category Legal Thought of the Week
Before the coming into operation of the Sectional Titles Schemes Management Act (STSMA) in 2016, many practitioners were uncertain who carried liability for payment of the special levy, if the levy was raised before or after the signing of a sale agreement or the registration of ownership in the name of the purchaser.
Similar to the provisions that applied before, section 3(3) of the STSMA allows for a special levy to be raised after the required resolution by trustees and that the levy is recoverable from the person who was the owner of the unit when the resolution was passed. The new Act goes one step further and stipulates that on the change of ownership of a unit, and where there is an instalment payment plan in place in respect of the special levy, the new owner becomes liable for a pro rata share of the levy contributions.
For example, if a unit was sold on 1 February and a special levy was raised on 3 February which is payable in 12 monthly instalments, then the purchaser taking transfer in March, will become liable for the instalments payable as from March onwards. If the levy is immediately due and payable in one lump sum, then the owner at the time (the seller) will remain liable therefor. It is however possible for the seller and purchaser to agree for the latter to take over the liability.
Contact STBB should you have further enquiries.