London, September 2023 Nexia is pleased to announce the imminent launch of a new member firm to service the GermanRead More
“…aye, there’s the rub” (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 owner’s estate. Indeed just the threat of a sequestration application is sometimes enough to frighten a recalcitrant debtor into paying up.
But, as Shakespeare might have put it, there’s an alarming “rub” here that body corporate trustees ignore at their peril. It arises from ‘the danger of contribution’ in insolvent estates. In a nutshell, where the ‘costs of sequestration’ 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!
A R46k shortfall – must the body corporate contribute?
The bottom line – trustees of bodies corporate should, before applying for a defaulting owner’s sequestration, make certain that there is no danger of contribution.
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