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Property Management, Property Rentals and Property Financial Services in South Africa

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The legal process of arrear levy collections

Elwin Els, the National Collections Manager for Trafalgar Property Management talks about the legal collection process of arrear levies. There are a couple of items discussed, one being the rationale “Why do we need attorneys?”, “Why do we need them to collect money for us?” Unfortunately, in many instances’ owners will ignore collection agents and there’s a necessity to refer something to a court of law or there’s a dispute that needs to be ventilated in the court.

For this we need attorneys, the attorneys are people we need that need to partner with you as a scheme and should always be used as a last resort. One of the biggest items or the hottest topics to deal with is the costs, in October of 2016 legislation was promulgated for Bodies Corporate that only allows a recovery of legal fees on party and party scale with the legislated fees. These fees are very low and unfortunately many attorneys refuse to work on these fees. This is a big risk for a scheme as if you are paying attorney-client scale fees you are only allowed to recover half of that or 30% of that which would be a financial loss for the scheme. Something to be looked or considered when choosing your supplier or if you are choosing a Trafalgar supplier this has already been resolved and attended to, all of the people on our panel work on this fee, on this fee structure and will only charge on that scale and this is done to minimise the risk and loss for bodies corporates and for HOA’s (Home Owners Association’s).

The legal process is a slow one, it is a very convoluted sort of process and does take very long, generally speaking the process is initiated through a letter of demand, again we have to refer to legislation, in this case 14 days have to be given of any notice before you can issue a summons.

Summons is then issued after the letter of demand has been dispatched, by way of registered mail, and email where possible, and once the summons has been issued which generally takes three weeks, the sheriff is then instructed to serve the summons.

The summons is generally served at the unit address, being the domicile, or any other address as we possibly can find. In many instances personal services will be required and in the instance of a vacant plot of land you will need to find an alternative service at the vacant land or on the security guard where the vacant plot is located will not be permitted, judgment will not be granted.

Once the sheriff has served the summons, he issues the attorneys with a return of service which is certification that he has attended to his legislative duties, thereafter a period of 10 days have to elapse before a request for default judgment can be made.

Requests for default judgment is where the unit owner or the owner of the property has been served, has not responded to the judge or the request to come to court and defend the matter and judgment will then be given by default. This is dealt with by magistrates in chamber or judges in chamber and unfortunately will easily be a six-month period before judgment is granted.

After the judgement is granted a warrant of execution is issued and the execution process kicks off. Again, the first port of call would be the unit itself, where movables have to be attached and sold in execution and thereafter immovables have to be attached, which is the property or the unit itself.

This is the end result that we are looking for, because in that process all funds would be recovered from the unit owner. The legal process does take long, generally speaking it takes between six months to a year before a matter is resolved, unfortunately this is something we can’t help, this is a dependency with the courts, with the sheriff’s and there’s many other factors that are involved.

There is also the further possibility that once the summons is served the unit owner or the owner of the property will defend the matter, once the matter is defended the next possible step would be to either refer the matter to trial or in the best practice is to refer the matter to a summary judgment.

Summary judgment is a process whereby we try and obtain judgment quicker and easier without having to go to a full trial and resolves around is there a bona fide defence, in other words, is there a triable issue, in many instances there are not and after summary judgment, the judgment is issued and we can proceed with the warrant of execution. The same process would then follow and we would have to execute, we would have to try to sell the moveable property first and thereafter immovable property.

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