A ‘levy clearance certificate’ is a document that is obtained from the Managing Agent or Trustees of a Body Corporate that certifies and confirms that the Seller of a unit does not owe any money to the Body Corporate when the Purchaser of the unit becomes the owner of that unit.
So, before any Conveyancer can register the transfer of any sectional title unit from a Seller to a Buyer, the Conveyancer MUST give the Deeds Registrar a levy clearance certificate that confirms:
• that the Seller has either paid everything he owes to the Body Corporate; OR
• that satisfactory arrangements have been made for the Seller to pay everything he owes to the Body Corporate.
This is set out in section 15B(3) of the Sectional Titles Act and there is no way that the Deeds Registrar will ever let a sectional title transfer be registered unless this section of the Act is complied with by the Conveyancer!
In this instance the officials in the Deeds Registrar’s office can be seen as policemen – by making sure that there is a levy clearance certificate they protect the Purchaser from having to pay any of the debts that show on the Seller’s levy account to the Body Corporate!
(Incidentally, from August 2008 owners of sectional title units in Gauteng were charged for Rates and Taxes on their units, where previously there was only 1 rates account for the entire building). This means that the Conveyancer will need to obtain 2 clearance certificates when a unit is transferred:
– A Levy Clearance Certificate from the Body Corporate; and
– A Rates Clearance Certificate from the City Council to certify that all rates and taxes for the unit have been paid in full.
DOES THE ISSUE OF A CLEARANCE CERTIFICATE FULLY PROTECT A PURCHASER AGAINST ALL BODY CORPORATE DEBT? . . .
. . . be careful, the answer is “NO”!
A chap consulted with me last week. He had bought a 2 bedroom townhouse in Germiston June last year.
Last week all the owners received a letter. From July each owner would pay a special levy over 3 years of R 1000 per month – there is a R 3.5 million debt outstanding to the City Council.
Regrettably when you buy into a sectional title scheme you buy into both the assets and liabilities of the Body Corporate!
He hadn’t checked the financial statements before putting pen to paper to buy the unit.
A COSTLY ERROR INDEED!
